How Facebook can win in mobile

Lots of speculation that Facebook is going to try (again) to build a mobile phone. I understand why they feel this is necessary – they’re already losing ad revenue due to people accessing the site via mobile apps – but as many others have commented, this is unlikely to work (and could cost them billions of dollars in the process).

Here’s a simple alternate plan for how they could win mobile revenue, and create a mobile platform, without building any hardware:

1. Extend their existing mobile app so that it allows users to run existing Facebook applications from within it.

2. Create new tools to allow app developers to take advantage of this capability. Creating mobile apps is still a lot of hard work, and walled gardens like iOS make it hard for developers, so a clean, cross-browser-compatible, Facebook app-based mobile platform could really help developers. Plus if its cleanly integrated into the mobile app, there’s no reason why users who are already utilizing it won’t adopt it as well.

3. Build out their existing ad network to target these new capabilities.

The above would be a lot of hard work, but IMHO it would have a much better chance of success, and would cost a fraction of what they would spend buying up hardware companies. Plus it plays well to their existing strength in platform development.

Update: Actually, I can think of one strategic reason why Facebook would want to get into the phone business, although I’m not certain that it is sufficient. If such a phone contained near field payment technology, then Facebook Credits could be used at the “final mile”. Such an approach would probably imply the purchase of a company like Square.