July 27, 2011 8:06 pm

Vodafone and Facebook team up on smartphone

Vodafone and Facebook have teamed up to release a low-cost smartphone dedicated solely to the social networking service, which the operator hopes will sell millions of devices to younger customers and in emerging markets.

The Vodafone 555 Blue, manufactured by Alcatel Lucent, comes with a full qwerty keyboard and a heavily customised operating system that puts Facebook features into the heart of the device, including placing Facebook messages alongside SMS in the same inbox and a dedicated ‘F’ button for sharing to the site.

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The phone is expected to retail for around $100 – seen as a crucial price point for mass-market adoption – and is billed as the first Facebook-centric device for pre-pay customers.

The two companies hope that it will be popular not only in markets such as India, South Africa and Turkey where both Facebook and mobile data usage is growing rapidly, but also more established markets such as the UK, among teenagers and other social networking addicts.

Reaching mobile-phone users in countries where fixed-line internet connections are scarce will be vital if Facebook is to reach its target of 1bn users, from 750m today.

The social networking company has previously worked with other mobile phone manufacturers, such as INQ and HTC, to build customised devices using its wide range of social networking functions, from chat to photo-sharing. But Vodafone believes that the 555 Blue – which runs on 2.5G networks, slower than the smartphone standard of 3G – is more efficient in its consumption of data than more sophisticated devices, estimating it would use less than 100Mb per month for a user with 300 Facebook friends.

Patrick Chomet, Vodafone’s group terminals director, said that he was relaxed about the operator’s brand being subsumed by Facebook’s, in spite of fears that network providers could become low-value “dumb pipes”.

“The idea came from us. Our strategy here is that the application is the internet,” he told the FT. “Our confidence comes from the fact that if we do great products that enable the customer to have great experiences, they will see the added value of Vodafone.”

He added: “We hope to sell millions . . . Anything below millions will be disappointing.”

Dave McQueen, analyst at Informa, a consultancy, said that Nokia and RIM’s BlackBerry devices had the most to lose in market share if the Facebook phone was successful.

But he said other devices using Google’s Android operating system were already available at comparable prices and allowed a wider range of apps to be installed, rather than effectively limiting the device to a single website.

“Vodafone has not been successful in the past at providing apps,” Mr McQueen added, noting the limited uptake of its Vodafone 360 social networking hub for smartphones. He added that consumers in emerging markets might prioritise other features such as good battery life or the ability to use two SIM cards above access to Facebook.

Mr Chomet said that its latest device and Vodafone 360 were targeted at “very different segments”. “This is part of a movement that we want to accelerate of empowering the mass market on data,” he said. “It doesn’t do everything . . . but it will be better than your Facebook experience on your smartphone because it’s not an app, it’s the whole phone.”

Facebook has said that mobile is one of its priorities for 2011. An update to its iPhone app last week, in response to a deluge of user complaints, accidentally gave some users a glimpse of an iPad application which is yet to be released.

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