According to the NYTimes, Facebook Inc (NASDAQ:FB) has been positioning itself to be possibly developing their own smartphone. The NYTimes article details that Facebook has already hired more than six ex-Apple engineers that have worked on the iPhone and iPad.
Before you start getting too excited, these reports have flooded the internet before. The most prior attempt was a partnership with HTC (codenamed “Buffy”) which is currently still active. However, last year, HTC released two Android phones named Salsa and Status, which had “deep” Facebook integration. Unfortunately, the phones were a huge miss and proved to be extremely costly for HTC.
It should also be noted that last year, Apple Inc. (NASDAQ:AAPL) and Facebook were planning on adding Facebook integration with iOS 4 just as Twitter had done. At the last moment, Facebook’s support of Ping made Apple pull the deal off the table. Although Apple CEO, Tim Cook, has had some nice things to say about Mark Zuckerberg and Facebook in the past, sentiment could change if Facebook does try to unveil an iPhone-killer.
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Facebook has been under fire since its IPO. Many investors do not fully trust Zuckerberg, however they acknowledged that he is a key part to Facebook. As of Friday’s close, Facebook is trading at $31.91, down big from its initial price of $38. However, it is not just Facebook that has taken heat from its IPO. Underwriter, Morgan Stanley (NYSE:MS) and NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) have both been sued and could possibly be forced to testify before Congress.
As you can see, there is a big distrust of Facebook currently. These phone rumors have swirled around before but I wouldn’t waste my time listening to them until we actually see some proof that there are plans to make a smart phone.
Another big question is how will their phone be different? On any smartphone available on the market, there is a Facebook app that can be used. Why would a consumer drop their Android or iPhone for a Facebook phone? If they are going to make a phone, it has to really stand out from its main competitors and the likelyhood of that is very slim. In fact, there is a bigger chance that a Facebook phone would be a flop rather than a game changer. The bottom line is that Facebook has done this dance before. I need to see some progress and the direction they plan on taking with the phone before I can get behind it.