Do we need a Facebook phone? The GigaOM Debate.

Last week’s news of a potential Facebook phone certainly got people talking. AllThingsD ran a multi-part series on the project, suggesting HTC could be tapped to build such a handset within the next 1.5 years. This differs from the Facebook phone news we reported last September, as sources then told us that INQ would be the first make the Facebook phone. Regardless of who builds it and when that happens, the real question without an answer is: Do we really need a Facebook phone?

Since the recent news trickled out over a short, holiday week, we spent some time pondering this question during the Thanksgiving weekend. Facebook already runs on nearly every phone platform, so maybe a dedicated device is overkill. On the other hand, a true Facebook phone could bring even more functionality and value than a phone that simply uses Facebook as an add-on integration point. Here are thoughts between the two Kevins at GigaOM: Fitchard and Tofel.

Facebook needs its own phone, and I think it needs to be something more than just “f button” devices that are popping up in the market. Facebook could provide an experience that turns the phone into an extension of a consumer’s Facebook account out into the wireless ether. Every photo, every contact, every message would be synched between Facebook and the phone. Every song listened to, every m-commerce purchase would be updated to the linked profile (cue “frictionless sharing”), making the customer’s web presence and mobile presence synonymous.

To me that sounds a bit scary, but I feel there a lot of people who want just that: seeing the world through Facebook’s lens. Of course, not every user is a hard-core Facebooker, but there are enough of them to make the phone attractive to a huge audience. Facebook also has an opportunity here to be a pioneer in the last frontier of mobile data. A lot of people have smartphones, but not everyone is that comfortable with mobile data. Facebook could be the “gateway app” to bring those outliers into the smartphone fold, especially if it can provide a cheap device and build a relatively painless mobile data plan around it. Facebook is already exploring some of these ideas with Orange(s FTE) in Europe and Africa.

Facebook could indeed provide a full, richer Facebook experience with their own phone, but I’m not sure people want Facebook to be the center of their phone’s universe. As an optional, third-party app. it works great: Those who want to share, can do so with ease. But a “complete” Facebook experience that drives the overall phone experience may be too much for some people. You mention frictionless sharing, which such a phone could easily accomplish, but I’m not sold on people wanting such a feature. And for those who don’t, how much privacy management will be required in the phone settings to handle this? Phones should be getting easier to use, not harder.

But I like the thoughts on Facebook’s expansion and testing in Europe and Africa. Experimentation is good. What features, though, does Facebook need to add in order to make a Facebook phone more appealing than a phone with Facebook? To me, there needs to be some killer feature that will cause people to consider such a product.

I hear you, and that’s why you and I would never get a Facebook phone; millions of Facebook users probably agree with as well. But many Facebook addicts would want that complete experience. Current smartphone users probably don’t want to give up flexibility, but what about those millions who don’t have them? Facebook could present them an easy, comfortable way to get online wirelessly. Apple(s aapl) lured people to smartphones by offering a similar proposition: a welcoming and familiar set of applications all within Apple’s walled garden. Apple let its customers outside the walls, but many didn’t want to leave. I’m not saying Facebook will make the “next iPhone”, but it does have the opportunity to trigger another wave of mass market smartphone adoption.

In terms of features, it’s hard to imagine Facebook offering something the smartphone market hasn’t already. My guess would be even tighter integration with Facebook’s core social networking services. It reminds me of your recent post: So I turned my Galaxy Tab into a Kindle Fire. As you pointed out, you’re fine with using generic Android software to run Amazon(s amzn) services on your Tab, but someone vested in Amazon’s features (like hardcore readers) would gravitate toward a Fire. (Ha! Try arguing with yourself now!) That actually brings me to a good question. Could a Facebook phone be Facebook’s Fire? I assume it’s doing a phone instead of a tablet so it will be affordable to their most loyal customers. But will Facebook heavily subsidize it, and by how much?

I’m just not sure how much value that “complete experience” would bring. You raise a good point on the millions — or even billions — that don’t have a smartphone. They don’t have the experience to know what they can and can’t do with a smartphone. But even someone in that camp will question the need for a true Facebook phone when they realize they can use a Facebook app on practically any handset today. Still, there could be enough people to justify Facebook’s investment in a phone if there’s some key value-add services.

Speaking of investments, you raised the question about a subsidized Facebook phone. That also gets me thinking about Facebook as an MVNO: providing both the phone and the wireless service. No, we haven’t yet seen a succesful MVNO, but I once suggested Google(s goog) might be able to pull it off with free hardware. Why? Because instead of subsidizing the handset with cash, Google could subsidize it by getting information; just as Facebook could do. That’s an intriguing idea or twist on a Facebook phone that could differentiate it from smartphones of today, although I still think it’s a long shot.

That business model would definitely be a better fit for Facebook than the one Amazon uses for the Kindles. You’re right, no MVNO built around an app or a specific media brand has succeeded: ESPN and Disney’s (s dis) MVNOs flopped, but their services were built on feature phones that were pretty limited. Facebook’s edge is that its services are fundamentally communication-based, not just geared toward the passive consumption of content. That model fits in more with the idea of an MVNO than one built around game updates and cartoon wallpapers. I think for Facebook to make the concept work, it would need to offer “unlimited Facebooking” as a key component of the data plan.

But it’s tough for an MVNO to do an unlimited anything since it can’t make the math work: The network’s owner charges the MVNO by the MB, while the MVNO charges the customer a flat rate. I just wrote about MVNO H2O Wireless, which tried offering an unlimited data plan but canceled it after just two months. Admittedly, unlimited Facebook use would be less bandwidth-consuming than unlimited everything, but then Facebook has to decide where to draw the line. If you click on a YouTube video embedded in a new stream, does that count as Facebook use or other? Instead of becoming an MVNO, do you think Facebook could follow Apple’s example, striking close relationships with the operator and then taking a cut of the data revenues? I’m sure some operators would be willing.

Agreed. If operators saw a way to boost revenues and their subscriber base with a Facebook phone, I can’t see them passing it up. But ultimately, it isn’t what the carriers think is valuable; it’s what the consumer values. So it all comes back to the central issue for me: What value-add does a Facebook phone bring? Why would I want one? What’s the benefit?

These are the questions that need answering instead of the ones around who should build it and when should it come to market. I’m not convinced we know the answer to the value question. But one thing I think we can both agree on: Facebook knows the future is mobile and it’s likely working on some justification and feature set for a Facebook phone.

What do you think?

Has either side convinced you of the need for a Facebook phone or is such a unicorn a problem in search of a solution?