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Facebook Phone: Not Quite What You Think

Stocks in this article: FB GOOG AMZN AAPL

NEW YORK ( TheStreet) -- The rumors about a so-called Facebook (FB - Get Report) phone haven't died, despite CEO Mark Zuckerberg trying to squash them. This week's press event isn't a Facebook-branded phone, but it's close.

The social networking giant sent out invites last week which read: "Come See Our New Home on Android." In talking to sources, I've learned that Facebook is going to build its own operating system, based off Google's (GOOG) Android, keeping users on the social network. The phone, which is reported to be an HTC phone, will come with Facebook's native apps, including Camera and Facebook Messenger to keep its users from venturing outside Facebook's walled garden.

Facebook is set to make the announcement at 10 a.m. PST on Thursday. The TheStreet is covering the event live.


It's possible that Facebook's move will be similar to what Amazon (AMZN - Get Report) has done with its Kindle Fire tablets, customizing Android to its own accord, and making it look very distinct and different from other versions of the Android operating system. Others believe it could be just a Facebook skin for Android.

If it is just a Facebook skin for the Android operating system, as Hudson Square analyst Dan Ernst believes, it could have less of an impact than many think.

"It's only going to be as interesting as HTC makes it with this phone. It's an interesting idea, but unless this can be implemented on any Android phone, then the broader impact is muted," Ernst said. The latest leaks show Facebook will have a social home screen, and perhaps allow you to view News Feed straight from the main screen.

Facebook has more than 650 million mobile users, and has surpassed 1 billion users overall, as the social network continues to expand its reach. Having a Facebook-centric smartphone makes sense for the company, as it increasingly turns to mobile to generate revenue growth and attract advertisers.


"Facebook desperately needs to become part of your daily life," said Ernst. With the constant flow towards instant information, Facebook risked being be a weekly, monthly checkup, but making it more front and center, Ernst feels users would be more apt to use it.

Facebook and Google have had a rocky history, with Zuckerberg noting in the past the two companies don't speak that often. With Facebook using Google's Android as the base for its mobile operating system, this could be a signal that the relationship between the two companies has thawed, despite Google's best efforts to encroach into the social networking world.

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