Months after a rumored Facebook (FB) phone proved to be a glorified app, rumors surfaced this week that the social network kings recently met with Blackberry (BBRY) to discuss a potential purchase. In the attached video Bob Peck of SunTrust suggests Blackberry might be stretching the depth of the conversation but Facebook's interest in hardware is real.
"All we know is that Blackberry asked for a meeting and Facebook saw them," says Peck, adding "there's one thing that's there that I think is very important and that's point of control."
Pointing to Google's (GOOG) Android and Apple's (AAPL) entire ecosystem, Peck says what Facebook likes about the idea of making a smartphone is the ability to control the entire user experience. If users are routed to their mobile operating system through Facebook, the entire experience of interacting with the smartphone could be "monetized" with ads and payments.
From such a perspective, using a Facebook smartphone sounds like Dante's 8th circle of hell but it's hard to blame Zuckerberg for trying.
For investors waiting for Facebook to report tonight the issue isn't ambition, but focus. While Google and Apple generate cash, so much cash they literally have trouble spending it all, Facebook doesn't have that problem. If there aren't higher-margin ways to monetize mobile Facebook's upside is limited.
Peck says the upside is worth the distraction. If Facebook has the phone it always knows where you are. It can push you towards places to eat, drink or just about anything else. All approved by your network (and kicking money back to Facebook).
It's the same basic premise as Facebook itself. Give up a little privacy in return for tracking your friends and expanding your horizons. It seems weird now but consider that ten years ago Apple was primarily focused on making free-standing iPods. As they know better than anyone, it's all about the platform.
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