Is Facebook Secretly Cloning the iPhone 5?
The fifth iPhone is only a few months away from release. But it seems as if Facebook is attempting to one-up Apple with an iPhone-like device of its own.
Earlier this week, the New York Times reported that Facebook (NASDAQ: FB) had hired more than six "former Apple software and hardware engineers who worked on the iPhone, and one who worked on the iPad."
Not surprisingly, the publication's sources spoke on the condition of anonymity "for fear of jeopardizing their employment or relationships with Facebook."
In the hours that followed, every tech publication in the world speculated on the matter, from GigaOM (which pondered if a Facebook phone was an "ambitious leap or fatal mistake") to Business Insider (whose headline reads, "If Facebook Really Goes Into The Mobile Hardware Business, Investors Should Run Away Screaming").
It's not unprecedented for a software company to get into the hardware business. In addition to Google (NASDAQ: GOOG), which has yet to confirm its desire to build anything other than software, Microsoft (NASDAQ: MSFT) found a new source of revenue in building its own devices. Its Zune MP3 player initiative may have been a total failure, but the company's multi-featured game console, Xbox 360, has become one of Microsoft's most profitable ventures.
But unlike the Windows maker, which manufactured the Xbox itself (and unlike Google, which might do some of its own manufacturing with the help of Motorola), Facebook is not likely to do any of its own manufacturing. At best, the company will "enhance" or "optimize" a smartphone from an existing manufacturer, such as Samsung or HTC. That's a far cry from the hype surrounding this so-called Facebook phone.
Money Well Spent?
No one knows exactly how much money Facebook is investing in the development of its new (still unconfirmed) smartphone. But in acquiring Instagram, Facebook showed that it is not afraid to throw big money at a project that it believes is crucial to the company's future. If the rumors are correct, Facebook may be willing to spend another billion dollars to acquire Opera Software, the company behind the popular Opera Web browser.
Thus, if Facebook firmly believes that it needs to produce its own smartphone, then it will likely be willing to spend as much as a billion dollars to get the job done.
What would a billion-dollar smartphone look like? That remains to be seen. But even if it comes close to matching the iPhone 5 in terms of specs or features, it is unlikely to pose a serious threat to Apple's (NASDAQ: AAPL) dominance.
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