Why is Facebook making a phone that nobody wants?

Why is Facebook making a phone that nobody wants? -- Reports have surfaced again in the past week that Facebook is working on a phone.

The latest news on the long-rumored project is that Facebook has abandoned its plan to work on both the hardware and software, as Apple does, and instead will partner with hardware manufacturer HTC. The Facebook phone's software, meanwhile, will be a modified version of Google's Android.

The question is: Why?

Why would a social network want to compete in the cell phone business? And how can it, given that Apple, Google and others already seem to have the market wrapped up?

Does anyone want a Facebook phone?

Perhaps Facebook users are clamoring for a new socially connected phone? Nope. Judging by the reaction to the news around the Web this past week, a good number of tech commentators and Facebook users aren't the slightest bit keen on the idea of Facebook releasing a cell phone.

Privacy concerns are among the top objections. Facebook already has enough information about us, some people fear, and buying a Facebook phone would surely provide the social-networking giant with even more control over our personal data.

In fact, an informal poll found that 80% of respondents did not want a Facebook phone. Only 7.8% said they'd consider it. If there's very little demand for a Facebook phone, then why pursue the idea?

To find the answer, it helps to consider the biggest growth sectors in consumer technology. While social networking is a large-scale trend, the growth of mobile phones is perhaps a larger one. Other tech giants -- Apple, Microsoft, Amazon and Google -- have all made their claims here. Facebook has not.

In fact, Facebook is a laggard in mobile networking: Its iPad app launched a full 18 months after the groundbreaking tablet debuted. That's a lifetime in the fast-paced world of tech.

App stores

This mobile megatrend breaks down into a series of smaller trends. Take app stores, for instance. The app store is now the dominant way to distribute software to devices: The companies that manage these stores control the future of computing.

Facebook's Silicon Valley rivals, Apple and Google, own the largest app stores, while Amazon is likely to see success building its own app store on top of Google's Android.

Facebook once looked to be the winner in app distribution -- the Facebook Platform showed huge promise -- but now it must go through its competitors to get its software on these devices. By building its own alternative to mobile app stores, either on top of Android or using HTML5 apps on the Web, Facebook might get back in the game.

Mobile payments

What about mobile payments? It's often been said that if Facebook were a country, it would be one of the most populous in the world. Facebook would love for that "country" to have an economy to match, and that means having all its users embrace Facebook Credits.

Meanwhile, using your phone instead of your credit card is set to be a huge trend in 2012 thanks to the addition of "tap to pay" technology in some handsets. It's the biggest change in payments technology since the credit card, and Facebook Credits doesn't stand a chance.

Instead, rival Google is plowing ahead with Google Wallet, which when combined with Google's Android operating system could make Google a leader in this hot market.

Social networking

What about social networking itself? Could the growth of mobile Web browsing undermine Facebook's leadership here?

Facebook's closest competitors for the social crown are Twitter and Google+. So what would happen if Google were to put Google+ right into Android, the world's most popular mobile operating system?

For Facebook, that could be disastrous. Google+ would come baked in to your phone, but getting Facebook would require an additional download.

A win-win?

So why is Facebook making a phone if nobody wants to buy one? Perhaps because it has to: If Facebook can't compete with Google and Apple in mobile technology, it may find itself on the losing side of some of consumer tech's greatest battles.

I, for one, support the effort: If Facebook succeeds, we all benefit from more competition in the smartphone market.

And if Facebook fails, we lose nothing. I'd even be willing to bet on the likely outcome. Facebook won't dominate the phone market, but it will figure out new ways to make our phones and our applications more social. That sounds like a positive outcome for all. ( cnn.com )