Does Facebook 'Have' to be in the Smartphone Business?

By Gary Kim May 29, 2012

Some might argue that Facebook, which in 2010 was working on a smartphone project, needs to be in the smartphone business for strategic reasons, such as supporting its foray into mobile advertising. By that logic, Facebook would gain by creating a new platform for displaying ads, outside the Facebook application.

Whether a necessary move, or not, Google's moves into mobile devices largely revolve around creating a platform for mobile advertising as well. In a broad sense, entry into the mobile handset business is part of a revenue diversification program.

One can argue that Facebook cannot succeed "wildly," either because Apple and Samsung now seem to dominate the smartphone market, or because there isn't enough added value to entice lots of consumers, even those who use Facebook heavily, to switch to a Facebook optimized device.

There is no need, and likely little demand for Facebook’s own smartphone, Douglas McIntyre argues. 

Facebook had 901 million monthly active users, and 488 million of those used its mobile products. In April, the number of mobile users surpassed 500 million. But does that usage require a Facebook phone?

That arguably is a different question than "does Facebook need to succeed in mobile?" To the extent that the smartphone is the computer, any application provider, especially those supported by advertising, must succeed on the smartphone. It still isn't obvious that Facebook, or other leading platforms, need to produce their own hardware.

But facing Apple, Google, Amazon and Microsoft in the device business has to put some pressure on Facebook executives. It might not be the case that a hardware component is "essential" for any of those platforms. It might be helpful. The issue is how helpful, and how much money Facebook should spend to create and sustain that part of its platform.

Edited by Brooke Neuman

Contributing Editor

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