Since Mark Zuckerberg launched Facebook in 2004, the social network has become one of the most important centerpieces in society, especially as it becomes increasingly digital and mobile. Yet, as reflected by Facebook's shares since its IPO, the true value of Facebook has not yet translated to revenue dollars. That may change, however, if Facebook decides to build its first-ever piece of hardware: A Facebook smartphone.
On Sunday, the New York Times reported that Facebook hopes to release its own smartphone by next year, citing several Facebook employees, recruited engineers, and those familiar with the company's plans. They all spoke on the condition of anonymity to protect their employment and relationships with Facebook.
Giving more validation to the Facebook phone is the fact that Zuckerberg's company has already hired more than six former software and hardware engineers from Apple -- all but one had previously worked on the iPhone, with the one standout having worked on the iPad.
One of the former Apple engineers said he met with Zuckerberg, who then peppered him with questions about how smartphones worked, including the intricate details [like] the types of chips used. The engineer said Zuckerberg's questions did not sound like simple curiosity. Another former Apple engineer said they had met with a Facebook executive, who discussed with the individual about plans to build hardware for Facebook.
The move to start making physical hardware out of Facebook's software makes sense: As a newly public company, Zuckerberg must find new ways to generate revenue, especially in the highly lucrative mobile arena.
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, a Facebook employee said, according to the newspaper.
Facebook HQ has received many-a-voicemail recently about the Facebook phone rumor, to which the company replied with a message given to AllThingsD last year: Our mobile strategy is simple: We think every mobile device is better if it is deeply social. We're working across the entire mobile industry; with operators, hardware manufacturers, OS providers, and application developers to bring powerful social experiences to more people around the world.
Previous Attempts To Build A Facebook Phone
While this idea to build a Facebook Phone would seem like a new venture, this is actually the company's third attempt to build a smartphone in the last three years, according to a former recruit. A Facebook employee said that the project was attempted several times because Facebook thought it could figure out a hardware solution by itself; it has since learned that phones require designers with phone-making experience.
In 2010, TechCrunch reported that Facebook was building a smartphone, but according to a few engineers who had worked on it, the project self-imploded after Zuckerberg's team realized the difficulties involved with creating such a product.
Building isn't something you can just jump into, said Hugo Fiennes, a former Apple hardware manager for the first four iPhones and who is starting a new hardware company, Electric Imp. You change the smallest thing on a smartphone and you can completely change how all the antennas work. You don't learn this unless you've been doing it for a while. Going into the phone business is incredibly complex.
Rumors of a Facebook Phone arose again in November 2011, when AllThingsD reported that Facebook and HTC had partnered up to create a smartphone, codenamed Buffy. As of April, Buffy was still happening.
Facebook's recent hiring decisions show that the company is looking to expand the team working on Buffy, and even build other smartphone projects as well. Even though many large tech companies like Hewlett-Packard and Dell have tried to build phone hardware and failed, Facebook seems set up to succeed in this arena. Yet, the project is definitely a secret: There have been no job listings posted to the company's website, and talent is being hired in a more direct manner.
Why A Facebook Phone Makes Sense
Assuming Zuckerberg can build the right team to construct a sleek and personal smartphone, a Facebook Phone could really put a dent in the smartphone market.
Smartphones are inherently social gadgets, yet the companies that build them, including Apple, Google, Samsung, LG, HTC and others, have not yet realized the social potential of these smart devices.
Apple has maybe come the close: Any iPhone, iPad, or iPod Touch user can send texts, pictures, and videos to each other for free, and the company has been trying to find new ways to connect people, from the Gaming Center, to FaceTime. Google is also catching up in the social realm, with Hangouts being by-far the most popular feature in its Google+ social network, and with its Project Glass getting plenty of attention from those who want to interact with the real world and digital world simultaneously.
Yet, Apple and Google are focused on making the best smartphone experience. Facebook, on the other hand, could be the first to build the best social experience. Here's a number of reasons why it would work:
Users Become Contacts: Facebook has the users to make a Facebook Phone happen: With 900 million users signed up to its software service, Facebook could easily create a platform where friends can then request each others' phone numbers -- directly over Facebook Phone, or online, or via the application -- which, upon acceptance, would be immediately added to your phone contacts in your Facebook Phone.
Notifications: Facebook users will regularly receive innumerable notifications each day: It could be a friend request, or an event invitation, or a notice that someone has commented on a photo or thread you were apart of. A Facebook phone would be able to keep better track of your notifications, and even integrate them with other parts of the phone, such as your Calendar and your Camera.
Camera: The newly-released Facebook Camera app definitely seems like a precursor to a Facebook Phone experience. The Facebook Camera app allows users to take photos from their phone's camera roll and upload up to 30 photos, edit them with filters and other photo tools, and publish them directly to Facebook. On the Facebook Phone, this would likely be a similar concept: Users could have a setting where taking a picture automatically uploads it to Facebook.
Calendar: How useful would it be if all of your Facebook events immediately synched to your digital calendar? If Facebook creates a phone, events could seamlessly update onto your phone, and even given you notifications when the event is a day or hours away.
Photos and Video: Multimedia is a big part of Facebook. Users love to link photos and videos to their friends, as well as share personal photos and videos of their own. A Facebook Phone could integrate all of this media in either one or two simple applications, making viewing and uploading photos a process that requires only one device.
Third-Party Applications: Facebook introduced a new family of partnerships in September with the Social Graph, which linked Facebook to various other services like Spotify, Nike, and the Washington Post. On a Facebook Phone, Facebook could make it so new applications are downloadable through an App Store of its own, where users can download or sign up for the services if they aren't already registered. Furthermore, Facebook could license the games it makes available on Facebook to be downloaded and played in an app format.
Why Facebook Will Build A Phone
Even if Facebook doesn't immediately succeed in building a phone itself, the company will find a way to make this project happen, even if it means using some of the $16 billion from its IPO earlier this month to buy a phone maker like Research In Motion (worth less than $6 billion), HTC (worth about $11.8 billion), or INQ Mobile for a substantially less sum of money.
Facebook would no doubt attract many buyers with a branded smartphone, which would put less pressure on Zuckerberg to find ways to monetize his website and mobile apps. Hopefully, a Facebook Phone is just the beginning of what Zuckerberg has up his sleeve for the future of his company. Because while the software still rules the day, it will be hardware and advertising that keeps investors happily paying the bills in Menlo Park, Calif.