With rumours circulating around the web that Facebook is set to join the mobile market with its very own handset device, it’s worth asking whether the mobile market is ready and able to accommodate yet another player into an already crowded and ultra-competitive space.

The Facebook phone story started on Sunday when TechCrunch claimed that Facebook was secretly building a mobile phone: “Or rather, they’re building the software for the phone and working with a third party to actually build the hardware. Which is exactly what Apple and everyone else does, too,” wrote Michael Arrington.
Facebook could be following in the steps of Google, which released the Nexus One earlier this year in January. Google is Facebook’s number one rival online; our latest data shows that Facebook is the second most visited site in the UK, but the gap between the two is closing.

Mobile phones are the most searched for gadget online, accounting for 24% of all gadget-related searches in the week ending 11 September 2010. Over the last year the mobile market has remained reasonably consistent online, with its market share of internet searches for September 2010 within 1% of where it was in September 2009.

The spikes in the mobile sector in June and July can mostly be attributed to the iPhone 4, which was announced and then released this summer. Apple’s iPhone dominates the mobile phone scene online, and it’s this dominance of the mobile space that Facebook wants to challenge according to TechCrunch.
Demand for new phones remains high, and most of the new phones that consumers are now searching for are smartphones such as the iPhone or competing devices powered by Google’s Android operating system . The introduction of this new generation of phones has made a significant difference to how people use their devices, with mobile web browsing finally hitting the mainstream and millions of apps downloaded every day.
Facebook has been a major beneficiary of this trend, with its mobile site and apps amongst the most popular in the UK and elsewhere, so you can see why the social networking giant (it accounts for over half the market in both the UK and USA) could be interested getting more involved in the market.
An interesting comparison is to look at what happened when Google launched its own phone, the Nexus One. As you can see from the chart below searches spike during the launch period, but have declined rapidly since. But that doesn’t mean that Google has failed in the mobile market – far from it.

The role of the Nexus One was to seed the market for Google and encourage other hardware manufacturers to adopt the Android platform. Of the top 100 most popular mobile handsets searched for online last week, one in five of them had the Android OS. Moreover, those phones which were Android-powered accounted for 26.8% of all the UK Internet searches for the top 100 mobile handsets. As a marketing tool to showcase the Android platform, the Nexus One can be deemed a success.
Of course, to a certain extent this is all speculation. If you listen to Facebook itself the answer is pretty simple: “Facebook is not building a phone” – words straight from the horse’s mouth. And the company has a good point: Facebook is already one of the most popular mobile websites in the world, why get into the costly business of building mobile hardware (albeit most likely via a third party)?
Clearly we’ll find out over the next few months if the rumours turn out to be true, but it will be interesting to see how consumers respond to the idea of a Facebook phone – expect a follow up blog post from us analysing the search data next week.