Rumor Mill: Facebook goes back to work on smartphone

Facebook hopes to release its own smartphone by next year and has poached more than half a dozen former software and hardware engineers from Apple (NASDAQ:AAPL) to make it happen, according to a report in the New York Times.

The report, which cited unnamed sources, is the latest in a series of reports about Facebook's plans to build a smartphone of its own, something Facebook has repeatedly denied it intends to do. Interestingly, in one telling anecdote, the report notes that one engineer who formerly worked on the iPhone at Apple met with Facebook CEO Mark Zuckerberg, who quizzed the engineer on the internal workings of smartphones down to the chipsets used in them.

"Our mobile strategy is simple: We think every mobile device is better if it is deeply social," Facebook said in a statement, repeating one it gave last year. "We're working across the entire mobile industry; with operators, hardware manufacturers, OS providers, and application developers."

In November All Things Digital reported that the social networking giant was collaborating with Taiwanese manufacturer HTC to build an Android-powered device delivering deep integration of its services. The smartphone, code-named "Buffy" in honor of the television series Buffy the Vampire Slayer, was said to run a heavily modified version of Google's (NASDAQ:GOOG) Android platform, and was said to support HTML5. HTC reportedly beat out Samsung Electronics to land the Facebook phone deal. Although HTC and rival manufacturers have developed devices with dedicated Facebook buttons, the Buffy phone would reportedly integrate social media services at a far deeper level, integrating contacts and sharing into the core of the user experience.

Facebook also tried deep integration with the company INQ Mobile in 2010.

Now, according to the New York Times report, the Buffy team inside Facebook has been beefed up and the company is exploring other smartphone projects as well.

Developing its own smartphone has its perils. Facebook is a software company, not a hardware maker. Google, which last week closed its $12.5 billion acquisition of Motorola Mobility (NYSE:MMI), now has a surplus of hardware talent inside its structure, something Facebook does not have.

Additionally, Facebook itself has acknowledged that it may run into trouble monetizing its massive mobile user base. Facebook boasts more than 901 million users worldwide, up 33 percent from 680 million a year ago, with 488 million users accessing the site via mobile device each month. However, in a regulatory filing earlier this month, Facebook explained that increasing its mobile base, and specifically the shift of users from the ad-supported Web version to its apps, could potentially hurt its business model and long-term revenue goals.

For more:
- see this NYT article
- see this The Verge article
- see this GigaOM article
- see this VentureBeat article

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