Should Facebook Make a Smartphone?

Rumors have resurfaced that Facebook is working on a project to develop its own smartphone. There are clues and leaks suggesting that Facebook is exploring its mobile options with a possible device launch in 2013. The big question, though, is whether or not it makes any sensefor Facebook to do so.

Facebook is king of the social networks. It has already surpassed Google to become the online destination where users spend the majority of their time. Nearly a billion people around the world rely on Facebook to share photos, status updates, check-ins, and just stay connected with their networks of friends and family.

Does Facebook need to be in the smartphone platform/hardware business?For many users Facebook has become synonymous with the Internet. With as much clout as Facebook already has, what would it gain from jumping into the highly competitive smartphone market?

An article by Nick Bilton in the New York Times quotes an unnamed Facebook employee explaining, “Mark [Zuckerberg] is worried that if he doesn’t create a mobile phone in the near future that Facebook will simply become an app on other mobile platforms.”

Would that be so bad? Or, to rephrase—isn’t that a worthwhile goal that other businesses would love to achieve?

My PCWorld peer Daniel Ionescu describes the crux of Facebook’s dilemma. “While the social network uses several kinds of targeted ads to make money, it has difficulties monetizing some 200 million users who use Facebook from their mobiles.”

Facebook is already one of the most popular and widely used apps on the iOS, Android, BlackBerry, and Windows Phone mobile platforms. Rather than building its own smartphone, Facebook should focus on ways to monetize the massive mobile user base it already has. No matter how successful a Facebook smartphone could be, there will still be tens (or hundreds) of millions of Facebook users on other mobile platforms.

There are two significant risks if Facebook is, in fact, developing its own smartphone. First, if it’s not a success it becomes a blemish Facebook’s reputation and brand. If it works, however, Facebook could run the risk of alienating other platforms--or favoring its own platform in a way that weakens the Facebook app on other platforms--and end up diluting its overall base.

The ultimate solution may lie with other currently circulating rumors. There are suggestions that Facebook may be developing its own Web browser, or just buying Opera and turning it into a Facebook browser, and persistent hints that Facebook may expand into online search--pitting it more directly against its archrival Google.

Having a Facebook-centric browser and Facebook-centric search would put the social network in a position to funnel the online activities of Facebook users to get ads in front of more people. It would make Facebook more valuable as a marketing resource, and generate revenue for Facebook following a similar model to Google.

Alone, the browser and search may not be enough. Facebook would still be dependent on users to choose its browser or search engine, or for other mobile platforms to employ them as the default browser or search--which is highly unlikely. But, if Facebook combines all three—browser, search, and smartphone—it may have a winner.

Without a Facebook-centric browser and search function, though, there would be little—if any—benefit from a Facebook smartphone. It would still rely on a third-party browser and search and wouldn’t really generate any more revenue.

The smartphone business is tough, but it’s not impossible. When the iPhone debuted, Apple’s rivals didn’t take it seriously. A few years ago there was no Android, and now it is the dominant smartphone platform.

If the rumors are true we’ll have to wait and see if a Facebook smartphone platform can become the next iOS or Android, or if it ends up struggling like Windows Phone, or fizzling into obscurity like webOS.