Zuckerberg: Facebook phone makes no sense

September 12, 2012

Zuckerberg: Facebook phone makes no senseFacebook chief Mark Zuckerberg has flatly denied the company is working on making its own smartphone. He says that from a business perspective, the idea it makes no sense.

Barely a month goes by without some new rumor about a Facebook phone, often from some usually credible sources. But speaking at a conference organized by TechCrunch today, Zuckerberg says its simply a matter of numbers.

He argues that if the company made a phone, it could potentially sell 10 million handsets, but that is hardly anything compared to the almost 950 million users the company now has: “it doesn’t move the needle for us.”

That argument doesn’t necessarily stack up though. With its last stated annual turnover being $3.7 billion, it’s taking less than four bucks per user per year. Whatever your business model, you’d make a hell of a lot more than that from each smartphone buyer.

Even if you simply licensed the Facebook name and took $50 per handset, that’s $500 million of extra profit. That’s not bad when you consider the company is currently on pace to do around $1 billion in annual profits (once you take out one-off stock compensation payments.)

None of this is to say Facebook isn’t interested in smartphones: quite the opposite. Zuckerberg says “we want to build a system which is as deeply as possible integrated into every major device people want to use.”

According to Zuckerberg that is already well underway, with half of the 500 leading iOS apps already integrating with Facebook. He also says the company will step up its efforts to target Android device users and to find ways of bringing advertising to all mobile users.

Zuckerberg also believes the company could make more of its position in the search market: “We do on the order of a billion queries a day already and we’re basically not even trying.”

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