Facebook denies it's working on a smartphone, but new reports indicate the social-networking giant may be following in the footsteps of Google and Microsoft with a social phone that could debut on AT&T. Bloomberg reports that Facebook is partnering with INQ Mobile, a handset maker best known for its social-networking-oriented phones. Bloomberg cites not one, but three people familiar with the negotiations.
The rumored devices would feature Facebook and run on Google's Android operating system. But even though Facebook reportedly has a hand in the development, people familiar with the matter say the social-networking company may not put its brand name on the phone.
Facebook's Mobile Foray
"INQ Mobile put out a couple of phones last year that prominently featured Facebook, but not exclusively among social networks. Clearly the handset maker gets more marketing mileage out of 'Facebook phone' than 'INQ phone'," said Greg Sterling, principal analyst at Sterling Market Intelligence.
As Sterling sees it, a single deeply integrated handset isn't the beginning and end of Facebook's vision. The company wants to be deeply integrated into multiple mobile operating systems and aspires to play an expansive role in the mobile ecosystem as a social platform or layer across applications, he said.
"This phone, assuming it appears, could be very much like the Google Nexus One, a quasi-branded device closely aligned with Facebook," Sterling said. "But clearly this is not Facebook's only initiative in the fast-growing mobile market."
Driving Ad Revenues
Facebook's motivations for going mobile, then, may be similar to Google's. According to Borrell Associates, advertising within mobile apps will reach more than $305 million in 2010 and more than double to an estimated $685 million in 2011 in the U.S. alone. The firm expects that number to grow to $8 billion by 2015. And that's just in-app advertising.
But Facebook's biggest competitor on this front may not be Google, but Apple. Apple introduced iAd in April, putting the mobile advertising industry on notice that it plans to drive millions in revenue from its platform that aims to combine the emotion of TV ads with the interactivity of web ads.
Apple's iAd leverages mobile apps and browsers. When users click on mobile ads now, they are almost always taken out of an app to a web browser, which loads the advertiser's web page. Users must then navigate back to their app, and it can be difficult to return to exactly where they left.
But Facebook's brand name, even if the social-networking giant does slap it on a phone, is no guarantee of success. Google's Nexus One has gone by the wayside, and so has Microsoft's KIN social phone.
Microsoft's touchscreen phone offered a compact form factor with software that aimed to help users discover, share and interact with friends and family online. It targeted younger demographics with capabilities such as allowing users to organize and view social-media feeds, video, messages and other content. But like the Nexus One, it didn't resonate with the market.