Facebook’s Tuesday event fuels ‘Facebook phone’ rumor

Last week, Facebook invited members of the press to a special event at its corporate headquarters in Menlo Park, CA on Tuesday. These sorts of invites are rare for Facebook, and so speculation is growing about what the company is planning.

Some noted that the invite came just minutes after rumors of a cheaper iPhone hit the web — leading them to wonder whether Facebook is doing something in the phone area. After all, Facebook’s lack of monetization on the mobile phone remains one of its biggest challenges, and one that most people attribute to causing the sharp plunge in Facebook’s stock price last year. Indeed, Facebook’s stock is still way down from where it was in May when it first went public. Facebook CEO Mark Zuckerberg, in attempt to reassure the market, has responded all along that investors do not fully appreciate what Facebook has been working on, and to stay tuned. Well, now six months later, the market is primed to see something big in this area.

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But the fact is no one knows what Facebook has planned for Tuesday.

Writer and investor MG Siegler cites multiple sources while saying Facebook will announce some sort of Facebook phone, but adds the caveat that it’s unlikely to include any sort of hardware that Facebook has built. Indeed, in the past, Facebook has insisted it won’t get into the hardware business. It’s more likely that Facebook will show off some sort of Facebook OS, Siegler says, but concedes he’s far from certain about this.

And there were the reports, which we followed in April of last year, of a “Facebook phone” supposedly being built by HTC. The rumor was first aired by Digitimes, far from the most accurate source out there, but onlookers did sees some logic in such a phone: HTC has been struggling as a smartphone manufacturer, getting beaten solidly by Samsung and others. A closer alliance with Facebook by HTC, similar to how HTC warmed up with Google to showcase the earliest Android phones, might make sense for HTC, and it might have offered Facebook attractive terms to do so. What form this might take is unknown, but presumably some sort of extra tight integration between Facebook and the underlying hardware.

If this is the season for speculation, we’ll jump in too. From our standpoint, what Facebook needs badly is to find a way to make money from mobile in ways that the existing advertising industry has failed to do. Despite the incredibly impressive consumer adoption of smartphones, app publishers like Facebook have been left in the cold, because banner advertising hasn’t worked on the small form factor of the phone. Other forms of monetization have come up short too. Only the carriers, chip makers, manufacturers like Apple and Samsung and a few others, have made serious cash off of mobile. Another thing that haunts Facebook is its HTML5 mobile app experience. Early on, Facebook bet heavy on HTML5, but later called it one of its biggest mistakes. So while I also have no idea what Facebook will announce, I’d like to think it would be something to aide the Facebook application’s integration or standing in the existing mobile landscape in a big way, for example a smoother HTML5 experience, perhaps in coordination with a constellation of carrier networks and phone chip makers. Or something that will help Facebook break the monetization logjam, by making it easier to serve compelling ads dynamically.

Don’t get your hopes up too high. The invitation simply says “Come and see what we’re building,” and it led one of our writers to think that Facebook is merely inviting the press to see the new headquarters it has been building out. That would be a lot less exciting, but plausible. One of the biggest challenges Facebook has on its hands is hiring talented engineers. Amid a flagging stock price, and highly competitive players like Apple and Google poaching the same engineers, a showing of its new headquarters by Facebook would be a mundane but sensible way to try to lure that talent.

Stay tuned for live reporting on Tuesday.