10 Comments

Summary:

It may be a contrary opinion, but I think Facebook should build its own phone — not a smartphone, but a cheap feature phone. I wouldn’t buy it. You wouldn’t buy it. But millions of people would. Here’s why.

facebook-phone-thumb

Facebook should have announced its own phone today; there, I said it. In my opinion, Facebook is ignoring a big opportunity at the very broad inexpensive base of the handset market. If it were to create a cheap feature phone optimized for its own services, it would not only become more dominant in mobile, but also would further solidify its role as the world’s social network of record.

First, let me say I’m not one of those people who thinks that every brand or tech darling needs its own hardware. I think the idea of an Amazon smartphone is silly and a Twitter phone even sillier. I believe there’s limited appeal for specialty Xbox or Nintendo gaming handset. And I feel the short unhappy lives of virtual carriers ESPN Mobile and Disney Mobile show that the market has little use for devices built around a specific company’s content.

Facebook Like signAll of these companies are better served by offering up their content and services through an open application environment. In his very astute analysis post on Wednesday, my colleague Kevin Tofel claims the same logic applies to Facebook: It can much more easily and much more efficiently extend its reach through software, rather hardware. I agree with Kevin, but only up to a point.

I think Kevin is right that Facebook has no business creating its own smartphone. People buy smartphones for flexibility, and they’re paying for the privilege of not being tied down to a specific set of services or apps. A feature phone, however, is a much different animal. A feature phone is a much more rigid device, built over proprietary software and designed to do a few things — and only those few things.

There are still billions of people around the world buying feature phones, and they’re not approaching those devices with any smartphone expectations. They essentially want a communication device, and Facebook is perfectly positioned to deliver that communication capability in spades.

Facebook is already a communications company

Unlike say an Amazon or a Disney, Facebook’s whole business model is built around the idea of social communication. With Facebook’s suite of apps services, you can IM; email; share photos, videos, links and updates; coordinate activities and even make phone calls. While most social networks or over-the-top communications apps are limited by the size of their networks, Facebook doesn’t have that limitation.

Apart from the telephone grid and email, with 1.06 billion active daily users Facebook is probably the largest communications network in the world. And for many people Facebook has become their de facto communications network. I haven’t gotten an email form my younger sister in years. If she wants to contact me she pings me on Facebook. The point I’m trying to make is that many people have chosen to make Facebook the organ by which they communicate with the world. I’m not saying that’s a good thing, but it’s certainly something Facebook could capitalize on.

Who would buy a Facebook phone?

I would argue there’s already a substantial crossover between likely feature phone buyers and Facebook junkies — teenagers, for instance — but Facebook could further broaden that mutual appeal.

There are still plenty of people in the U.S. who are uncomfortable with the idea of the mobile internet, but are perfectly comfortable using Facebook online. They would embrace a Facebook-centric phone as a way to ease into mobile data (think of it as a “gateway phone”). Parents giving their younger children their first internet-capable handset might be much more comfortable with a device that hosted a single social network, over which they could easily keep tabs on their activities.

Facebook is growing like wildfire in developing markets where few people can afford a smartphone or have regular access to a PC. A cheap Facebook phone would be ideal for their needs. Many more people would simply be attracted to such a device’s cheapness. A free or sub-$50 device that comes with a cheap data plan and a core social networking service you’re already well familiar with — that’s tough to ignore.

Facebook Mark ZuckerbergFacebook has already started pursuing a cautious form of this strategy. It’s working with mobile chipmaker Spreadtrum to pre-optimize its software for the cheapest Android handsets. If Facebook made its own inexpensive phone, though, it would exert considerable influence in the market. Carriers would be anxious to carry any Facebook-branded device, so Zuckerberg and team could negotiate specialty data plans for their members. Orange and Facebook are already experimenting with this concept in some European countries, exempting social network traffic from the usual data caps.

The company could also optimize any Facebook device for its own advertising, kicking of its still-nascent mobile monetization strategy. If it made enough money through advertising it could even take a page from Amazon’s book, subsidizing the cost of the phone or the cost of the mobile service, thus making its phone even more accessible.

Ultimately the Facebook phone and the Facebook network would begin reinforcing one another. After year or two of viewing the mobile internet through the Facebook lens, a user might graduate to a full-fledged smartphone, but they would more than likely bring their dependence on Facebook’s applications to the new device. Billions of people around the world will get their first exposure to the internet through a mobile phone. If it can produce a cheap, attractive device, Facebook can ensure that exposure is through its portal.

Getting into the hardware business isn’t an easy thing to do, especially if you’re expertise is in software, but in Facebook’s case it might be worth it. The more vested Facebook is in mobile, the stronger its social network becomes.

You can argue all you like about how worthless a Facebook phone would be to you are your friends, and I would agree with you. I wouldn’t buy a Facebook phone. As a GigaOM reader, I doubt you would either.

But I guarantee there would be millions of people who would.

  1. Gosh, seriously? Zuck said it – “it doesn’t move the needle for them”. And I concur. Building yet another phone would be boring, laughable and detrimental to the reputation of the company. Android launcher is pretty much the closest they could do to that without wasting big bucks. But yeah, it’s not going to make much impact anyway.

    Share
  2. Could they build a phone that millions (a small wedge of their users) might buy? Sure.

    But that’s the easy part. Then there’s the hard bits: inventory management, distribution, repair&return, warranty, customer support, regulatory certification, upgrades, etc..

    Getting into the hardware business would be a bad distraction for Facebook. They don’t have the DNA or the skills.

    Instead, they are following the Google Nexus strategy of working with entrenched manufacturers to create licensed devices. Much smarter.

    Share
    1. Kevin Fitchard Thursday, April 4, 2013

      Hi Mcbesse,

      All good points, and I can definitely see a partnership with a phone manufacturer makes more sense. In almost every case, I think a brand making their vanity phone is a stupid idea. To me, FB is the exception for the reasons I stated. But I concede it’s damn tough business to be in.

      I’m curious though whether you think the other brand devices like the Nexus or the Kindle Fire were a good idea. (Obviously there’s the iPhone, but let’s not even touch that for now).

      Share
    2. I think you make a really valid point. Licensing seems the logical solution.

      Share
  3. You are way off.
    “world’s social network of record.” – that’s not true ,maybe the western world ,but the western world uses smartphones.
    For most dumbphone buyers the FB label would be meaningless and nobody would care.
    Dumbphones are also almost dead , already smartphone sales surpassed dumbphone sales and there is no going back.

    As for what they did,the mistake is that their focus is on FB not on making the device better.
    How they did it,was just cheap,fast and low risk. They made a FB OS and phone without making one.

    Share
      1. It’s not about the install base but the future buyers , smartphones are pretty cheap and getting cheaper. It doesn’t matter what one uses now but what the next purchase will be.
        And btw those numbers compared to population numbers are small.
        There is no volume in dumbphones in a few years , can a dumbphone add users? sure but it’s not the best way to utilize resources nor the best way to address the vast majority of potential users .A dumbphone would target a niche that is about to go extinct.

        Share
  4. What are the potential ad revenues from a fb feature phone user?

    Share
  5. Frank A NYC Friday, April 5, 2013

    Since smart phones are gaining market share at the expense of feature phones, Why would FB make a phone for a declining market? That makes zero sense. The app launcher approach if you are a FB fan (i’m not) makes more sense. You can choose to have a more immersed FB experience, or not. You can switch back and forth as you wish.

    Share
  6. Kevin,
    Totally agree. The picture of the phone you posted would have been great way to enter the market.

    Share

Comments have been disabled for this post