Facebook Phone? Yes it’s being created

Latest reports inform that Facebook has been secretly recruiting smartphone hardware engineers—including former Apple staffers—in an effort to build its own phone. The talk about Facebook phone is not new, TechCrunch first reported on the project in 2010.

Facebook wants its own phone as a lot of the social network’s users log in to the site through their mobile devices -- As Facebook hasn’t still found a good way to make money on small, ad-free screens. Or more specifically make considerable revenue from its Facebook platform, an exercise which has become even more difficult with the advent of mobile in the big picture.

How good is the strategy?

Mobile commerce that’s ‘earning money from mobile platform’ has evolved a lot and Facebook may be entering too late. On the top of the ‘making money with Mobile’ idea is the Apple. The company owns everything which is required to make money on mobile – A Device, An operating System and an application store. With all components of mobile commerce in its control. Apple can earn money from not only app sales, but also ad clicks. Add to this, Apple’s iconic devices (aimed at content consumption) which it sells without much effort and that too at high margin; and you have a clear winner. Apple now collects 75 percent of the profits in the phone business.

On the second rung positions is Google. The search giant has a mobile operating system, Android, which it gives for free to all and sundry; as a result it has a fast proliferating devices at its disposal. Google has its own ad network and Application store; so even if it not making money at present, it can do so in future.

Facebook in contrast has a social network. Although it can boast of 900 million plus active users, but the fact that it has no iconic device (like Apple’s iPhone in 2007) or an application store (like Apple’s App Store again); hence Facebook appears to lose the mobile battle, even if it creates its own device now.

Even in a scenario where, Facebook creates a device which matches Apple iPhone 1 in novelty factor and sells it at lowest of prices; Facebook will still be lacking other components of Mobile commerce. Developing all pieces of the mobile zigsaw puzzle simultaneously Facebook will need money and time. But Google and Apple, who are sitting on cash piles, are not sitting idle.

Can Facebook see itself as a big Mobile App and focus on developing a virtual intra app economy, by giving some cut o mobile reveue to likes of Apple and Google? --------

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