According to reporting by The New York Times, Facebook (Nasdaq: FB) is working on a smartphone.
Um, haven't we heard this one before? Indeed. The first time, in September 2010, rumor had it the social network was reaching out to handset makers in order to find a partner to make a phone tailored to the needs of the socially addicted.
More recently, the U.K.'s Daily Mail published a story predicting CEO Mark Zuckerberg would engage in a bidding war with Vodafone for the rights to acquire ailing handset manufacturer Research In Motion (Nasdaq: RIMM).
Have the Interwebs gone loony? Have we forgotten that it was only last July when Facebook introduced a software app for dumb feature phones, expanding access to the social network for hundreds of millions of users worldwide? Every phone is a Facebook phone, it seems to me.
For its part, The Times is reporting that Zuck isn't satisfied with his company's mobile strategy. Reporter Nick Bilton quotes an anonymous employee who says that, without a phone, Zuckerberg fears Facebook becoming just another app on other mobile platforms.
Really?
Several observers have already pointed out that entering the phone business is difficult, and that even if Facebook is hiring former iPhone developers to gain expertise, there's no guarantee of success. Google's (Nasdaq: GOOG) purchase of Android did nothing to boost the success of the Nexus One smartphone.
Even so, it's possible to buy relevant expertise. It's much harder to change consumer habits, which is exactly what Facebook would have to do.
Consumers have come to see smartphones as a sort of indispensible digital Swiss army knife. Apple (Nasdaq: AAPL) reinforces this belief by proclaiming that "there's an app" for virtually every need. The iPhone isn't a phone; it's an assistant.
How does Facebook position a distinct device -- designed solely for its network -- without first getting consumers to buy into the idea that its platform is the everyplatform, an iPhone-like collection of apps and related goodies that makes life easier than it would be otherwise? Frankly, I don't see a way, which suggests this rumored pursuit of a smartphone is a dead-end waste of shareholder capital.
Worse, it reveals a perceived weakness so big Zuckerberg apparently feels compelled to spend millions to fill it. But is mobile really as big a problem as the rumors make it out to be? I'm not so sure. I still believe the Facebook Connect universal login system is one of the world's most valuable marketing databases. A profitable payments system only adds to the allure, which is why, earlier today, I made an outperform CAPScall on Facebook.
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