There are rumours that Facebook will launch a phone, and it is starting to look like these rumours are true.
Facebook will not actually produce phones like Samsung or LG does. Rather, it will get HTC to produce an Android phone that will be heavily customized.
Why would Facebook do this?
Facebook primarily makes money through advertising. Therefore, if it wants to make money, it needs to get as many people using Facebook as possible. If Facebook provided a cheap phone to users, it logically follows that many people will want to buy it and advertising revenue will increase.
Google does something similar with its Nexus devices, which are sold almost at zero profit.
What will be the difference between Google's Nexus device and Facebook's phone? I think it will be brand recognition. If you talk to the average person on the street, he or she will not know what a Nexus is simply because there is virtually no advertising. However, the average person will definitely know about Samsung and Apple simply because these two companies spend the most on advertising. People feel comfortable buying a product from a brand that they know and are familiar with.
Facebook doesn't need to advertise much because just about everyone knows what Facebook is. Therefore, once word gets out that Facebook has a cheap but good phone available, people will buy it. Why wouldn't they? If it's cheap, works well, has an okay design, and is from a well-known brand, people will buy it. This should over time put pressure on high-margin smartphone makers such as Samsung and especially Apple.
There is an argument some make that the battle of Android phones has already been fought and Samsung has won. But this makes no difference. It does not matter what operating system Facebook uses for its phones as long as they can customize it so that users use Facebook. They cannot use iOS since it is owned by Apple. They could produce their own operating system, but that will take require massive investment. Since Android is free, why not just take it and customize it? Furthermore, Google's Play Store has a massive amount of apps available. It makes sense to use Android.
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