Qn: So is a Facebook phone a good idea for Facebook? Isn't every smart phone already a Facebook phone, as long as it has a Facebook app?
Ans: Is a Facebook phone a good idea for Facebook? That depends on whether or not any of us would want it.
Qn: Well, yes, of course. So why would any of us want it?
Ans: That depends on what it does. It can't just be another mobile advertising phone like a Google phone.
More precisely, the value of a Facebook phone will depend on how it fits into the Facebook ecosystem and how it fits into out lives.
An iPhone is a wonderfully engineered, beautiful piece of equipment. It was the first widely adopted smart phone, partly because the interfaces were so appealing, partly because the networks were finally fast enough to support it, and partly because of how smoothly it fit into the Apple ecosystem... I could immediately integrate it into my calendar and phonebook, of course, and with my photographs, and with my iTunes content. The App store integrated the entire Apple ecosystem, and made each iPhone both a perfect part of the Apple ecosystem and a perfect reflection of its owner's personality.
A Google Android phone is likewise wonderfully integrated into the Google ecosystem. Unfortunately, from my perspective, this means invasion of privacy, and the integration of search, texting, email, GPS, and ultimately even my voice messages and phone calls, to make me the target of advertising. But it serves a purpose for Google and is heavily subsidized as a result. And it too is a well-engineered and attractive piece of equipment.
The value of a Facebook phone will, to a large extent be determined by what it does, specifically by how well it is integrated into the entire Facebook ecosystem and how well it supports Facebook's strategy.
Qn: OK. So you are saying that the value of the FB Phone will be determined by how well it is integrated into the emerging FB strategy. What is the Facebook strategy?
Ans: I don't think they know yet. I see three possible strategies, each with different revenue opportunities, not just for the FB phone, but for the company as a whole.
(1) Facebook can continue to think of itself as an online advertising company. That would make the FB phone an online advertising phone. Unfortunately for Facebook, we don't really need a second Google. More importantly, Facebook is not ideally positioned to compete with
Google as an advertising company. General Motors' experience, leading to GM's recent decision to pull their advertising from Facebook, confirms what some of us have been saying for years: social media companies and online social interactions are not the ideal place to try to impose advertising upon users.
The most effective time to influence a consumer's behavior online is not when he or she is socializing, but when he or she is searching, and at present Google seems to have the search market pretty well locked up. Yes, Facebook can try to create a reliable form of social search, but it's hard to monetize telling the truth; companies really don't need to pay Facebook for honestly telling Facebook users where their friends like to eat in Chicago. And selling referrals based on online LIKE can represent dangerous and embarrassing invasions of privacy, as the New York Times recently reported.
If Facebook is going to be just another online advertising company, and if the FB Phone is going to be just another Google-clone mobile advertising phone, I don't think the phone, or Facebook itself, has much of a future.
Facebook might position itself as my personal safe place. My instant messages would not stored after I deleted them, shared, sold, or data mined. My email messages would not be stored after I deleted them, shared, sold, or data mined. I could post whatever I wanted, or LIKE whatever I want, secure in the knowledge that I could completely determine who has access to my posts. More importantly, anything I pulled from my safe place would be pulled forever; I know that's not complete protection, since my friends and the people to whom I provide online access could preserve copies through downloads or screen scrapes, and could use them in unreasonable ways, but at least that's potential abuse by my friends, who I have some reason to trust, and not almost certain abuse for profit by a company that I have no reason to trust.
Of course, this is an entirely different business model. Facebook would earn its revenues, not be providing free services as bait and then snooping on their customers like Google, but as providing valuable services and charging for them. We already pay for monthly voice service on our phones and for monthly texting services, and we would be outraged if our phone service provider starting reading, storing, and analyzing our messages or our social interactions for commercial purposes. Fortunately, we are protected; it is illegal for phone companies to do this. Why do we permit the creator of our phones to do things we would never tolerate from the phone company or from state or local governments just because the company provides free services? Perhaps for a small additional monthly fee, a Facebook phone could provide an online safe place for our social interactions.
Of course, to ensure our privacy, Facebook would need its own phone; a Google phone would never work for this since it really would not be safe. And as importantly, to assure me that our privacy was really protected, Facebook would need its own phone and it would have to be provably secure from hacking by Google; once again a Google phone would never work for this because we would never trust it.
Surely as a safe provider of online social interactions and entertainment, Facebook would be entitled to at least a small fraction of what we currently pay for cable TV, phone service, or texting.
(3) Facebook can give us a reason to think of it without ever wanting to compare it to Google!
Many of us have come to lament the loss of our great third place in our hyperbusy modern lives. The first place, of course, is home, where we live. The second place is the office, where we work. The third place is where we want to go when we are not at either of the first two places. The French have bistros, the English have pubs, and here the rich have clubs. Many of us live poorer lives than we should, not because we are monetarily poor, but because we don't have a great good place to go to, like the mythical bar in Cheers, "where everybody knows your name."
There is a generation of new digerati, who have never been truly alone, or truly unconnected, who have sacrificed privacy for connectivity, but whose connectivity has not yet truly exploited the capability of new media. A great online third place is not made up of texting, like twitter. It is not dependent upon avatars and pseudo-personalities, to ensure that nobody knows your name. A great online place is one where you can control your space, share what you want, safe in the knowledge that you can be yourself because you and your friends are interacting, deeply and richly, and yet safely and confidentially.
A safe and personal place? Where I could interact with my friends no matter where in the world they, or I, might be?
I would pay for that. I suspect that most of Facebook's 900 million subscribers are already paying for online access, cell phone access, and texting. I suspect that many would pay a few dollars a month for the right Facebook experience.
And, of course, the Facebook phone would be the mobile interface to our integrated online great good place.
Qn: So you're saying that a Facebook phone makes sense for users and for Facebook only if it's part of a new Facebook strategy that makes sense for users and for Facebook?
Ans: Of course.
If Facebook finds the right strategy and the right revenue model, it will be a $100 billion company. And if it does not, neither Facebook nor the Facebook phone will be very interesting for long.
And I know it's a long shot. We have slowly been trained to accept ever-increasing privacy abuses from online service providers, as long as the services are free; we accept abuses from Google that we would never accept from the U.S. Postal Service, AT&T or Fed Ex. A strategy based on creating an online safe place may be risky if there is any charge for associated services. A strategy based on creating a truly great online social space, a truly great good place online, is less risky. This last strategy still has risks, principally because we don't yet really know what that great good place online would be.
But Facebook and Zuckerberg have overcome long odds before. Remember when it looked like MySpace was the social network to buy? Facebook comfortably defeated MySpace, and MySpace has collapsed. The trick now will be for Facebook to create a value proposition that keeps it from following MySpace and Second Life into oblivion.