I don’t think a Facebook phone is any kind of answer. It will have to be super-cheap to compete. After all, why buy a cow (a Facebook phone) when you can get milk (a Facebook app) for free? A Facebook phone looks like an expensive distraction, a war of choice.
– Brent Simmons, Ads in Your Face | Inessential
The only reason why Facebook would launch their own phone is to collect a portion of advertising dollars or in-app purchases like Apple does.
Why would a consumer choose to purchase the phone? Right now, there is no reason to switch. I don’t think the Facebook phone can compete with the iPhone’s features, and it may be difficult to convince a Google-lover to migrate to a phone that may not have Google apps available.
Facebook is going to have to come up with a reason for consumers to switch that goes beyond design, the feature set, the apps.
I think one possibility is to make the phone ad-free.
People pay good money for those premium apps to avoid the ads on mobile devices, and I think we have come to the point where people would pay to have ads disappear as much as possible. Facebook could ensure that the ads aren’t displayed on your mobile account, or the web version.
Considering that there will be a billion Facebook within 3–5 years, if not sooner, if only 1% decided to switch immediately, that would be 10 million users. At a price of $200, they would generate 2 billion dollars right away. Another tactic would be to limit the number of phones available, increasing demand and allow them to charge whatever they want for the phone.
I think going ad-free is the only shot they have at putting a dent in the other manufacturer’s pockets.