TechCrunch reports today that Facebook is
building its own smartphone:
It was a little less than a year ago that we broke the news that Google was working on a phone of its own – which was eventually revealed as the Nexus One. It was about that time, says out source, that Facebook first became concerned about the increasing power of the iPhone and Android platforms. And that awesome Facebook apps for those phones may not be enough to counter a long term competitive threat.
Specifically, Facebook wants to integrate deeply into the contacts list and other core functions of the phone. It can only do that if it controls the operating system.
TechCrunch also notes that facebook is vigorously
denying this without denying it, as it were:
We’ve been taking a beating today on our story about Facebook working on a branded mobile phone. Just like last year with the Google Phone, lots of people threw tantrums about how we made the story up right up until Google launched their own branded phone, the Nexus One.
And that’s what’s happening today, due in no small part to Facebook PR issuing what looks like a blanket denial of the story this morning. “The story is not accurate!”
Except the story is accurate. Facebook has been working with hardware manufacturers to explore building their own phone. We don’t know the timing, and we don’t know how deep the software stack is that Facebook is contemplating building, but we know that as of very recently the project was alive and well.
There is in fact a bit of a rush by various players to try and build their own walled gardens in the emerging mobile smartphone world, the belief being that if you can trap the consumer onto your device and deeply integrate with their address book etc then they won't get off your service. (And the worry being that Apple and Google will do it to you if you don't)
And on mobile people actually are used to paying money....
However, it reminds me of the early days of the online media world in the early 1990's, where just about every player with half a pretence of an interest in the emerging Internet market was looking at the end to end value chain they could own, if they could wall in enough customers.
It never came to pass, for 3 main reasons:
(i) No one player had the resources to put together a compelling enough offer across the value chain from content through to device to persuade people to lock themselves in
(ii) Users did not like the idea of being locked in to one service provider and acted against it, forcing interconnection (the same happened with SMS, the first mobile data service)
(iii) Technology moved on, allowing open access to be set up easily (HTML, Web Browsers etc).
In this arena they are also assuming that the mobile telcos will remain passive, yet they see all the data and have that most golden of gooses, the customer credit card (and a s a recent Pew survey noted, customers most want to pay for things via their mobile bill).
So, what to make of Faceboook's alleged attempt to buck the trend and bunker-hunt its users? The biggest issue it has is it doesn't own any end device marketing and delivery capability, and thus credibility. Google, despite all the horses and men at its disposal, was woeful at selling its own device (heck, even Microsoft has struggled) but at least they and MSFT have OS level control. Facebook can't use Android or iOS if they want any form of control of their own walled garden for long.
Maybe they can do a deal with Nokia/Symbian or Microsoft, who both need some sort of lever into the "smart" smartphone market and will have to burn money in buying their way in anyhows - but that limits facebook to whoever uses those phones.
No, endgame is they will have to try and install a deeper software suite that uses the user's address book onto Other People's Phones, and will have to buy their way in (otherwise why would anyone do it?) but they will be unable to make it walled off for long - competition, consumer inclination, mobile telco self interest and regulation will probably all conspire against them.
But then the early 1990's were littered with abandoned walled gardens as well, and everyone today seems to have forgotten the past - or rather is seduced by the "it will work this time" cry of the new apostles.
