Facebook Phone Faces Uphill Battle

The Facebook phone rumors have resurfaced, this time with the weight of The New York Times behind the reports. Anonymous Facebook employees and others familiar with the company's plans suggest it will bring its own smartphone to the market by next year. The project is code-named "Buffy" and is being taken seriously by Facebook, despite a name inspired by a movie, TV show, and comic book.

Times' sources say Project Buffy started as a partnership with HTC, but has expanded to include "other smartphone projects, creating a team of seasoned hardware engineers who have built the devices before." To whit, Facebook has hired several former iPhone engineers from Apple, who were peppered with questions about the inner workings of smartphones by Facebook CEO Mark Zuckerberg.

When reached for comment, all Facebook was willing to say was, ""We're working across the entire mobile industry; with operators, hardware manufacturers, OS providers, and application developers." But it said the same thing last year in a statement provided to AllThingsD regarding the same essential subject.

In April, DigiTimes fielded a similar report regarding Facebook's plans. It reported that HTC had decided to strengthen its relationship with Facebook, rather than Google, and planned to forge ahead with a dedicated Facebook phone.

[ Can a Facebook phone beat back the march of Android phones? Read Android 4.0: HTC, Motorola, Sony Chart Different Paths. ]

The reason behind the decision, said DigiTimes, is because HTC felt burned by Google's tighter relationship with competitor Samsung. HTC built the first Nexus phone for Google (Nexus One), but Google has picked Samsung over HTC for the last two Nexus smartphones (Nexus S and Galaxy Nexus). Worse, supply chain sources suggest that Samsung has already been chosen by Google to make the fourth Nexus device. Finally, Google now owns Motorola, giving the Android giant its own hardware division. This has left HTC feeling like it needs a new partner in the smartphone market to help set it apart.

Take both reports together and, if you care to believe the sources, it almost makes sense. Facebook wants to be more than just a mobile app on today's hottest devices, and HTC wants to be more than Google and Microsoft's lackey. There's certainly potential in the idea, but the odds are stacked against Facebook for one big reason.

The market can't support another smartphone operating system.

The smartphone market has been consolidating over the course of the last two years. Symbian and Palm/webOS are out, Android and iOS are in. Windows Phone is, well, trying. RIM (the former smartphone champ!) is spiraling downward and has a real chance of flatlining. There are two platforms that dominate the field, two platforms that have taken out the entrenched players, two platforms that have the heartstrings of developers all a-twitching.

What can Facebook possibly offer all on its own that these other platforms can't or aren't already offering?

Others have tried and failed. INQ, a British company, made a series of devices that were "Facebook phones." After several years and generations of hardware, INQ essentially fell off the face of the planet. Same goes for HTC's own Facebook efforts. Last year, Facebook's supposed favored partner failed with two high-profile Facebook phones, the Salsa and ChaChaCha. The ChaChaCa was sold in the U.S. by AT&T as the Status. It was not a popular device.

Will the third time be the charm for Facebook? It's hard to imagine how.

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