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Facebook Tries, Tries Again on a Smartphone

Can a software company build its own smartphone?  We may find out soon.  —  This past week, Google completed its acquisition of the hardware maker Motorola Mobility for $12.5 billion, which could lead to the search giant's making its own smartphone.

Bits Nick Bilton

Context & Ripple Effects

Facebook’s mobile-hardware ambitions were already reported in 2010, including a reported secret phone project and subsequent claims of further phone details. The renewed effort matters because it suggests the company is still testing whether control of the device can strengthen its position in mobile.

Google’s completed $12.5 billion Motorola Mobility acquisition gives the same question a more concrete competitive frame: a software company can seek device control through acquisition as well as internal development, following Google’s earlier plans for an Android phone.

First-order effects

  • Facebook must take on the execution burden of device development rather than relying solely on its software presence across other manufacturers’ phones.
  • Google and Motorola Mobility become a prominent reference point for Facebook’s attempt, pairing a major mobile platform with an established hardware maker.

Second-order effects

  • HTC and other handset makers face stronger incentives to differentiate their own software and device strategies as platform companies seek more control over the phone experience.
  • Facebook’s effort raises the value of hardware engineering and supplier relationships for internet companies that want their services to be the device’s defining layer.

Third-order effects

  • If platform companies continue moving into devices, smartphone competition shifts from standalone apps and operating systems toward integrated hardware-software-service stacks.
  • The pattern points to a more vertically integrated mobile market, where access to hardware talent and manufacturing partners becomes a strategic constraint for software firms.

The trend: Mobile platforms are pushing beyond software distribution toward tighter control of the handset and its user experience.

Related: Systems-design advantage · Hardware talent moat · Facebook Is Secretly Building A Phone · Exclusive: Google Plans Its Own Android Phone · Google · Motorola Mobility

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