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5/28/2012
09:52 PM
Eric Zeman
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Facebook Phone Faces Uphill Battle

Facebook plans to bring its own smartphone to market, according to reports. If it does, it will probably fail.

Facebook's History: From Dorm To IPO Darling
Facebook's History: From Dorm To IPO Darling
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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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iZoneStudios
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iZoneStudios,
User Rank: Apprentice
5/29/2012 | 4:42:29 PM
re: Facebook Phone Faces Uphill Battle
I wouldn't count a company like Facebook (with tons of new cash) to come-up with a disruptive concept that will have millions of people switching to their platform: Like making the service FREE or drastically low (advertising supported)... or something like that.

Just look at how Microsoft markets the Xbox... They sell it at a loss (because they can afford it). I see Facebook doing the same thing... Offering a much lower-cost-per month (possibly even free) simply to attract eyeballs...

If I were them, I'd turn their global social community into a true LOCAL solution for businesses. Small businesses have been left without an effective advertising alternative. Newspapers and Yello-pages are dead. What small businesses need are people walking in their doors and buying stuff! If I wee Facebook, I'd offer to PAY their millions of current subscribers to post recommendations of the local businesses they use successfully... Imagine how many people will switch to the new facebook phone if they could make money doing what they normally do anyway? They just have to do it through a Facebook phone! And quess how many local businesses would sign-up to be included... for a fee of course...

Well, that's what I would do... In fact, I had that idea over 12 years ago with a site called http://BetterLocal.com (but no funds to get it going)... Today I've revamped the idea with the http://99PercentDirectory.com (unfortunately, It's an idea for someone like Facebook, not an individual with many ideas but no ideas on how to finance it.

Unfortunately it's companies like Facebook that can use disruptive marketing techniques to finally create a local marketing model (one powered by instant social imput) that will most-likely triumph.

AustinIT
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AustinIT,
User Rank: Apprentice
5/29/2012 | 6:27:58 PM
re: Facebook Phone Faces Uphill Battle
Like Ronnie said "There you go again..." bashing Microsoft, for no apparent justification.

fwiw - HTC would be better off building a phone for the Windows Phone platform that was competitive instead of their half baked efforts thus far. The handset manufactures in general would do well to put up a couple of flagship hardware platforms running Windows Phone (in addition to Nokia) and you'll see what can be accomplished with that OS.

These days, no one wants an inferior piece of hardware no matter what OS or apps are running on it. h/w is a huge part of the decision making process when it comes to buying a smartphone.
Tom LaSusa
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Tom LaSusa,
User Rank: Apprentice
5/30/2012 | 1:56:35 AM
re: Facebook Phone Faces Uphill Battle
This market is so saturated with smartphones, I can't fathom what Zuckerberg and the rest of Team Facebook think will make their device stand out from the rest. Seems like their time would be better spend making improvements to Facebook (preferably the kind the audience wants).

Tom LaSusa
InformationWeek Community Manager
AJohnTurner
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AJohnTurner,
User Rank: Apprentice
5/31/2012 | 11:11:53 PM
re: Facebook Phone Faces Uphill Battle
Facebook wants a branded cellphone because their biggest growth area right now is smartphone users. Sometime around 2017 the two-billionth smartphone is expected to be manufactured and Facebook wishes to remain relevant in a world where these handheld computers doubly outnumber laptops, tablets and desktops combined....

...Relevant and let's admit it, dug into their users like a sandflea at the same time.

A branded Facebook platform you see implies a "captured" user, one who doesn't feel free to leave the branded service, one who may in fact be paying his ISP fees to Facebook themselves rather than to the local wireless carrier, storing his files on Facebook cloud servers and running Facebook-specific productivity apps; and yet who may feel rewarded for all of this encirclement by the feeling they are a *good* customer of a *good* company.

Consider how tobacco used to be marketed in America (and still is most other places) -- endless redemption certificates, promotional offers and points collection schemes. "Hey sixteen more packs and I can afford that leather steering wheel cover! I love Marlboros!"

Today Amazon.Com "captures" its regular users in a similar web. Think how many people you know who exclusively buy online from Amazon, who dote on the Gold Box Specials and their Prime status and dance up and down when they get a special offer notice. And how many of you are on your third Kindle not because you wore out the first two but because Amazon showers you with paperless reward coupons for owning and using a new Kindle?

So a picture of a profitable Facebook in five years would probably involve hundreds of millions of hopelessly conditioned/compulsive Facebook users who dote on their cheaply-built, frequently-replaced Facebook Phones like Xoanons from on high, fingering them like chainsmokers fishing for a fresh pack as they pay just enough attention to where they are walking/driving/performing heart surgery to make it through to their next fix of Farmville, sexting or Farmville Sexting Edition....

Brr! Anybody else get a cold chill up the back?
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