Facebook Phone Request: Denied!

An otherwise sleepy weekend got exciting when tech blog TechCrunch reported that Facebook is working on a smartphone. The leading social networking site -- 500 million active users strong and counting -- denied the report.

However, both TechCrunch and CNET reported that sources confirm that Facebook has reached out to handset makers and wireless carriers for the rollout of a Facebook-branded smartphone.

Who do you believe? It's always possible that Faceboook has since abandoned these efforts. Facebook might have been floating trial balloons, to see if the idea would fly.

It's easy to see why Facebook would want some skin in the smartphone space. The three largest tech darlings -- Apple (Nasdaq: AAPL  ) , Google (Nasdaq: GOOG  ) , and Microsoft (Nasdaq: MSFT  ) -- have mobile operating systems. Hewlett-Packard (NYSE: HPQ  ) snapped up Palm earlier this year, and Dell (Nasdaq: DELL  ) is a later arrival. If Facebook wants to rub elbows with the most valuable tech leaders, it may as well follow.

Unfortunately, there are also more than a few reasons to steer clear of this space. For starters, let's not forget the Microsoft Kin. Its quick springtime demise proved that a wireless gadget won't sell on social-media prowess alone. The mighty Google also stumbled with the Nexus One, when it wanted to market its own phone.

Facebook may also want to consider the ramifications of turning friends into enemies. Apple, BlackBerry maker Research in Motion (Nasdaq: RIMM  ) , and Droid dude Motorola (NYSE: MOT  ) relish the ability for owners to easily post status updates on Facebook and keep up with their friends. If Facebook is seen as a competitive threat, they suddenly have a vested interest in seeing Facebook fail.

Facebook has certainly grown quickly without the need of a proprietary smartphone.

Date

Users

8/26/08

100 million

4/8/09

200 million

9/15/09

300 million

2/4/10

400 million

7/21/10

500 million

Source: blog.facebook.com.

Isn't growth enough? Isn't attracting millions -- and tens millions -- of new members a month enough? Facebook has its plate full with monetization possibilities. It can't lose focus, given the fickle peaks of earlier social networks.

If it's real, it's still not too late to hang up on the Facebook Phone.

Would you buy a Facebook-branded phone? Share your thoughts in the comment box below?

Google and Microsoft are Motley Fool Inside Value recommendations. Google is a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor pick. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Longtime Fool contributor Rick Munarriz remembers when social networks were an offline endeavor. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


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