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DJ Chris's Blog

A Facebook Phone: Ambitious Leap or Fatal Mistake?



At this point, the fact that Facebook (FB) is struggling with its mobile strategy is not really news. The company itself flagged the issue in its pre-IPO documents, saying advertising revenue is not keeping up with expectations, and its $1 billion Instagram purchase was widely seen asan admission it needs a lot of help in the mobile department. But does it make any sense for the company to build its own phone? Some argue this would be a natural extension of the social network’s strategy, but others say it would be a monumentally stupid move to make and is almost inevitably doomed.

Talk of a dedicated Facebook phone resurfaced this weekend with a report from Nick Bilton in the New York Times that said the social network “hopes to release its own smartphone by next year” and has been hiring hardware engineers and developers—including several from Apple (AAPL)—as part of that effort. According to the sources Bilton talked to, Facebook Chief Executive Officer Mark Zuckerberg sees the mobile-phone project as something crucial to the future of the company, which just went public in a somewhat rocky IPO. Said one Facebook employee:

“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.”