Pharos-Tribune

Multimedia

May 31, 2012

Slate: Facebook smartphone? Dumb idea

(Continued)

It's obvious why Facebook would want its own phone. A lot of the social network's users log in to the site through their mobile devices, and Facebook hasn't found a good way to make money on small, ad-free screens. There's also the access threat — if most people come to Facebook through devices controlled by Google and Apple, Mark Zuckerberg can rightly fear that at some point, his rivals might somehow make it harder for people to get to his site. As one anonymous employee tells Bilton, "Mark is worried that if he doesn't create a mobile phone in the near future that Facebook will simply become an app on other mobile platforms."

But when you puzzle out the economics of Facebook's entry into this market, you inevitably come out scratching your head. How could they possibly make money from the phone business?

Let's say that Facebook tries to ape Apple's business model by building an amazing, one-of-a-kind phone that can be made at low prices, in high volumes, and will be snapped up at premium prices. OK — stop laughing. Apple's phone was the result of years of research and the sort of design, marketing and production expertise that comes from decades in the hardware business. What's more, when it launched in 2007, the iPhone was unlike anything else on the market, and it was thus something people were willing to pay a lot for. There is just no way that Facebook, a company that has never made any hardware, will come up with something like that.

Zuckerberg likely understands that, and is thus probably thinking of Facebook's mobile plan as a variant of the Android model. Facebook would create the operating system and would work with a third-party phone manufacturer to build the actual phones, which would be priced low enough to gain a large foothold in the market. The device would offer deep integration with Facebook's services, and Facebook would hope to make money through all of that increased usage — and the advertising that comes with it.

Text Only | Photo Reprints
Multimedia
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Poll

The Pence administration continues to cut Indiana agency budgets despite a state surplus of $2 billion. Is this wise management of state funds?

Yes
No
Not sure
     View Results
Featured Ads
AP Video
Ariz. Inmate Dies 2 Hours After Execution Began Crash Kills Teen Pilot Seeking World Record LeBron James Sends Apology Treat to Neighbors Raw: Funeral for Man Who Died in NYPD Custody Migrants Back in Honduras After US Deports Israeli American Reservist Torn Over Return Raw: ISS Cargo Ship Launches in Kazakhstan Six Indicted in StubHub Hacking Scheme Former NTSB Official: FAA Ban 'prudent' EPA Gets Hip With Kardashian Tweet Bodies of MH17 Victims Arrive in the Netherlands Biden Decries Voting Restrictions in NAACP Talk Broncos Owner Steps Down Due to Alzheimer's US, UN Push Shuttle Diplomacy in Mideast Trump: DC Hotel Will Be Among World's Best Plane Crashes in Taiwan, Dozens Feared Dead Republicans Hold a Hearing on IRS Lost Emails Raw: Mourners Gather As MH17 Bodies Transported Robot Parking Valet Creates Stress-free Travel Raw: Fight Breaks Out in Ukraine Parliament
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.