Wednesday, May 30, 2012

Facebook will not build a New mobile Phone

In last two days there has been rumors of Facebook launching a mobile phone. I read about it in the newspaper (yeah! I am little old fashioned, I still read newspapers) and quickly dismissed it as a hype or a wrong interpretation of  Facebook's real intentions.

Coming from a hardware design background and with software product management experience and drawing from my experience and business knowledge, I can openly say that,  Facebook  has other ideas when it hired Apple engineers - and making mobile phones is not one of them.

To understand  Facebook  motives, one must really look at the  Facebook  business model: Build a social network, sell advertisements on it & make money. Really simple.

But there has been some clinks in the model.  Facebook  has so far not been able to generate revenue from the mobile platform. It is tough to sell advertisements on the mobile screen, and so far, Facebook has not been successful in doing so. It may be a deliberate strategy by  Facebook  to avoid monetizing of mobile platform - till the technology matures to a point.

Even Google has seen the business challenges of making money on the mobile platform. Though Google dominates the mobile search, the revenue of advetizements has been limited.

For Facebook, the problem is multifaceted. 

  • The recent IPO means that  Facebook will have to press hard on the revenue & profit levers to justify the high P/E levels for its stock price.
  • Facebook  was originally developed for the desktop platform & the world is going mobile.
  • Facebook's current mobile offerings suck. The iPhone app is just about OK, but on iPad it is bad, and on Android it sucks. 
  • Facebook  must evolve rapidly on the mobile platform to offer multiple services/utilities to stay relevant on the mobile platform. Currently, the mobile apps are nothing but downgraded versions of its desktop offerings.
  • Mobile platforms are rapidly evolving. So Facebook must constantly keep up the app development for multiple platforms: iPhone, Blackberry, Bada, Andriod, Windows, etc., to keep itself relevant and useful for its users.

Given the problems  Facebook  is facing on the mobile platform, the idea of developing new mobile phone hardware platform with its own OS is plain stupid.

In my opinion,  Facebook  will probably develop/acquire a mobile browser that works across all cell phone platforms. The key idea is to create a standardized browser layer on which Facebook's web applications will run.

The current mobile broswers are inadequate for the task. All the current browsers were designed for the desktop platform and then adapted for mobiles. What is really needed is a mobile web browser that is built ground up for the mobile platform - that provides a common platform or a agateway for all the  Facebook  functions. This will help  Facebook  break away from the task of creating multiple apps, maintaining it on multiple platforms etc.

Having a browser layer will give a level of abstraction and seperation for  Facebook  and that will help  Facebook  create new social networking services: Voice chat, image/video sharing, messaging, email, location specific social networks etc.

Closing Thoughts

Building a new mobile phone/platform is a bad idea. Designing successful hardware platform is very tough (ask Intel or Nokia), making money on hardware is even tougher (ask Sony, HP, Palm, Motorola, Philips etc).  Facebook  lacks hardware design expertise, supply chain management expertise and does not deal with service providers. So, given the facts that  Facebook  does not have all the necessary competence needed to build cell phones, I would bet that  Facebook has no intention to build a new mobile platform.

Instead, I think  Facebook  is hiring hardware engineers to understand how the basic hardware platforms work and then create a browser that operates much better than all the current mobile browsers.


Sizzling LEO said...

Thats great news facebook should be launched Business Mobile Phones

Arun Kottolli said...

Facebook can still be a disruptive player in cell phone market. If Facebook can introduce audio/video calling via a Facebook App in mobiles.

As on today there are several other apps that does VoIP calling - Viber, Skype, Tango etc., and then there is Facetime from Apple.

But Facebook has a huge advantage over the current platforms - its social network!