Rumors that Facebook is developing its own branded smartphone have again resurfaced, with Bloomberg reporting the social networking giant is working with manufacturer HTC to release the device as soon as mid-2013.
Citing sources with knowledge of the matter, Bloomberg states Facebook and HTC originally planned to introduce the phone as early as late 2012, but pushed back the timetable to enable HTC to work on other projects. Sources add Facebook is developing its own modified mobile operating system to power the smartphone, and has also hired a team of former Apple engineers to improve its native iOS application.
Facebook neither confirmed nor denied the report. "Our mobile strategy is simple: We think every mobile device is better if it is deeply social," the company said. "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." HTC declined to comment.
Facebook will look to the branded device to drive mobile advertising revenues. "Usage is shifting to mobile, and they have not been able to monetize mobile," said Topeka Capital Markets analyst Victor Anthony. "To the extent that it's a device you own and carry around with you at all times, and it ties into the Facebook experience, it will be beneficial. They could then put a lot of ads onto the platform."
At present, Facebook derives almost all of its advertising profits from desktop display ads and Sponsored Stories promotions integrated into users' News Feeds; those initiatives yielded first quarter 2012 revenues of $872 million. In the weeks before and after Facebook's May IPO, the social networking giant has accelerated its mobile ad efforts, and last month introduced a mobile-only version of Sponsored Stories enabling marketers to target consumers exclusively on smartphones and tablets. Facebook's mobile advertising efforts could generate quarterly revenues of $300 million within the next year, eventually overtaking desktop ad revenues, according to a recent research note issued by J.P. Morgan analyst Doug Anmuth.
Rumors of a Facebook smartphone have been a fixture of the blogosphere for years, but have never come to fruition. This spring, reports surfaced indicating Facebook was considering a bid to acquire Opera Software, the firm behind the popular Opera Mini and Opera Mobile browsers, in an effort to create a mobile and desktop browser that closely integrates social networking features and plug-ins while reducing its reliance on browsers like Apple's Safari, Google's Chrome and Mozilla's Firefox. Such a deal has yet to materialize.
Facebook boasts more than 901 million users worldwide, up 33 percent from 680 million a year ago. Close to 500 million users access the site via mobile device each month.
