Buzz: Facebook hiring, working on mobile phone

MENLO PARK, Calif. (KGO) -- The buzz in Silicon Valley is that Facebook is working on a mobile phone and it could be using cash from its IPO to pay for the development.

Facebook is already on a talent hiring spree and it's looking for people with expertise in one specific area: mobile phones. Six or more engineers who worked on the Apple iPhone have already been brought on. We know Facebook is a social network. So, why does it need its own Facebook mobile phone?

"Well, they don't need a phone because they already have plenty of apps that run on phones, but by controlling their own eco-system with the phone, not only will you be able to run Facebook, but Facebook can have its own apps in the same way that Apple and Android have their own apps," technology analyst Larry Magid told ABC7 News.

Its own phone could also help Facebook become a major mobile advertising platform. Facebook generates its income from ads online, but critics say it's behind in making mobile a money-maker. Google was facing the same issue and that led to the creation of the Android operating system for mobile devices. Google even developed its own phone called the "Nexus One." It was built for Google by HTC, a Taiwan company with factories in China.

However, making a phone isn't as easy as it sounds. "It is hard to do a phone. First of all, you've got the technical issues and second of all, you have the eco-system of the carriers, and the carriers are difficult companies to do business with. Steve Jobs called them 'orifices,' referring to something you had to get through," Magid explained.

Apple succeeded with its iPhone and Google just completed a $14 billion deal to acquire Motorola Mobility. That could lead to a new breed of Google-made phones. Facebook could do a similar deal, flush that it is with the $16 billion raised from its IPO, but reports indicate that it's busy recruiting engineers who worked on the iPhone. That could mean it wants to create its phone in-house.

"I think Facebook's challenge is to not be a one-trick pony. It has to have multiple products if it's going to be worth $100 billion or more. And, certainly having a phone and lots of apps and an eco-system around that theoretically could bring them a lot of money," Magid said.

Now that Facebook is a public company, it's under increased pressure to keep growing revenue. The phone project could just be the answer.

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facebook, cellphone, apps, social media, apple, google, motorola, china, business, david louie

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