Facebook Won't Build an iPhone 5 Competitor
At a time when every company is rumored to be developing a smartphone, Facebook (NASDAQ: FB) Chief Executive Officer Mark Zuckerberg has announced that his company has no plans to enter the hardware market.
According to The Telegraph, Zuckerberg shared his views on producing a branded smartphone at TechCrunch Disrupt.
"I think brand specific hardware is a terrible idea," he said. "Amazon (NASDAQ: AMZN) is producing a completely integrated service that would do everything that a certain type of person might want from a tablet. Facebook doesn't do that."
Zuckerberg added that it would be "much more difficult [than] some people think" for the company, which has yet to produce hardware or build a smartphone. "It is a major logistical and technical undertaking."
These comments came yesterday evening, just one day before Apple (NASDAQ: AAPL) is scheduled to unveil the highly anticipated iPhone 5. The new smartphone is expected to make its worldwide debut at 10:00 a.m. PDT.
Over the last two weeks, the smartphone market has been flooded with new products from Samsung, Nokia (NYSE: NOK) and Motorola. HTC is also rumored to make a major announcement within the next month, while Amazon was expected to tease its first phone at the company's press event last week .Although no such device appeared, the online retail giant is still thought to be building a smartphone under the Kindle name with an early 2013 release date currently projected.
Next year, Research In Motion (NASDAQ: RIMM) will release BlackBerry 10, the long-awaited operating system (OS) upgrade that is hoped to turn the company around.
By developing a Facebook smartphone, the social media empire would be forced to compete directly with devices it currently uses to bolster its service. This could create a problem for the company as it attempts to find new ways to generate advertising revenue.
Earlier this year, General Motors (NYSE: GM) announced that it would no longer advertise with Facebook because the platform was not effective. Other companies, including Ford (NYSE: F) and Coca-Cola (NYSE: KO), disagreed with this assessment. In June, both firms pledged their support for the social media network.
Regardless, Facebook is still struggling to find ways to monetize its users. This is partially due to the low click-through rate on advertisements, but that is not the only problem. In a recent earnings release, the company announced that a significant number of its users are fake.
Investors were not impressed with Facebook's second-quarter results, which were in-line with estimates. Since its Initial Public Offering (IPO) in May, Facebook shares have lost nearly 50 percent of their value, dropping from $38.23 on May 18 to $19.43 at market close on September 11.
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