Facebook is reportedly working on a new smartphone with HTC, one of the top Android smartphone makers. The smartphone will run a customized version of Android which will be modified to integrate all of Facebook’s services and features for easy access. HTC has already made two Facebook enabled smartphones, the HTC Salsa and Chacha. However, they were just Android phones with light Facebook integration. This new device is expected to run a heavily modified version of Android, just like Amazon’s Kindle Fire, and will have system-level integration with Facebook. 
Mobile is crucial for Facebook, but is making its own smartphone the right way to go about it?
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Facebook is looking at the growing smartphone user base to drive growth on its platform. It announced that it had passed 500 million mobile monthly active users in April 2012. Given that smartphone and mobile penetration is growing rapidly around the world, mobile usage is what will drive the next phase of user growth and engagement for Facebook.
Having its own phone would enable Facebook to offer deeper integration of ad units withing the phone, and also accumulate other usage/location data from its users in order to better monetize them. Facebook is also working on improving its mobile offerings, with smartphone apps and mobile web versions of its platform. We expect Facebook to focus more on mobile advertising in the coming years, and become one of the top players in the space, competing with Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL). While there is not doubt that mobile represents a great opportunity for Facebook going forward, we’re not sure if developing its own phone is the right strategy, instead of focusing on making better apps for all major smartphone platforms improving the Facebook experience on feature phones.
Is Facebook, like Google, spreading itself too thin? What do you think?Notes: