Rumours have grown stronger in the last month that Facebook is set to enter the smartphone market currently dominated by Apple and Google by producing an operating system of it’s own.
The new Facebook phone project, supposedly codenamed ‘Buffy’ will develop a Facebook customised user interface based upon the Android system, to run on an HTC device. Other wilder rumours have suggested Facebook may even sell the phone for free, and this may not prove bad business sense due to its mobile marketing potential.
Google currently gives away its Android operating system to handset manufacturers for free, with the revenues coming from online marketing on Google’s online services which are integrated with the operating system. Facebook could increase its revenues from online marketing in a similar fashion by increasing web traffic to Facebook through integration with the phones operating system. There are further opportunities inmobile marketing and even geo marketing for a potential Facebook phone as the social networking site makes location more of an important factor in sharing.
Google and Apple have built many high end phones, so Facebook’s strategy may well be to target the lower end of the market knowing they can make a return from online marketing. The Amazon Kindle Fire has a similar low end strategy, undercutting the iPad on price and features, but through mobile marketing the revenues can be recouped from the sales of ebooks for the device, and also from online marketing advertisements subsidising the lowest priced Kindle.
While Apple may produce all aspects of their product in house and receive the largest share of profits in the smartphone industry, its rivals have shown that the value of online marketing as they generate profits through technology by using devices as tools for mobile marketing and online marketing in their primary businesses.
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