The Facebook Phone: Post IPO Blues

The long abandoned plans for a Facebook Phone have resurfaced after Mark Zuckerberg, Facebooks CEO, approached former Apple iPad and iPhone engineers to help create his vision. Facebook originally put a dedicated button on the HTC Status, a failed attempt at moving from the software realm to the hardware one. Albeit as a partnering with an existing hardware company, the Facebook Button, and to a large extent the HTC Status, failed miserably. So why is Mark Zuckerberg reviving such grand notions?

Post IPO Blues

You can’t have escaped the recent hype and disappointment that stemmed from the Facebook IPO. With inflated share prices at 104 times their market value and subsequent price drop during trading, underwriters were scrabbling to buy up all remaining stock on the first day of trading to prevent the price plummeting. This tactic worked, temporarily, but since then the price has dropped questioning the true value of Facebook stock. So how is this connected to the Facebook Phone? It’s quite simple. The value of Facebook comes from the userbase, more precisely being able to advertise to that userbase. 

When the product is free, you are the product.

The big criticism of the Facebook valuation was that more and more people are moving to their phones when using the Facebook site or application. With less time spent in front of a desktop or laptop computer, the mobile device has become the main target platform for Facebooks users. This has thrown up huge concerns regarding the effectiveness of advertising on such a small screen. Enter the Facebook Phone.

If You Build It They May Come

By creating a Facebook specific phone, Zuckerberg will no longer be limited by the capabilities of current devices, nor by the restrictions imposed by those device manufacturers; Apple in particular. Facebook will be creating their own platform, their own software and their own rules, but it remains to be seen how they can create an effective ad-based device whilst enticing users into switching from more mainstream devices.