Facebook Said to Be Working on Phones With INQ for AT&T

Facebook Inc. is working with mobile-handset manufacturer INQ Mobile Ltd. on two smartphones that may be carried by AT&T Inc., according to three people familiar with the matter.

The devices, which will feature Facebook social-networking services, are due to be introduced in Europe in the first half of 2011 and the U.S. in the second half, said one of the people, who asked not to be identified because the plans haven’t been made public. AT&T, the second-largest U.S. wireless service provider, is still considering whether to carry the devices and hasn’t made a deal, another of the people said.

Facebook, the world’s most popular social network, is redoubling efforts to reach mobile users, many of whom access the site on smartphones. About a fourth of the company’s more than 500 million users log on to Facebook from wireless devices. The phones also would present fresh competition to Apple Inc.’s iPhone and Research In Motion Ltd.’s BlackBerry.

“People are increasingly updating their status when they’re on the go,” said Augie Ray, an analyst at Forrester Research Inc. in San Francisco. “Facebook is a very popular application on every single smartphone in the country.”

The new phones are slated to run Google Inc.’s Android operating system and will probably carry the AT&T brand in the U.S., according to one of the people. Facebook hasn’t decided whether its name will be used on the devices, the person said.

Getting More Social

While Facebook declined to comment on plans for specific phones, the company said it continues to work with INQ Mobile, which has previously sold phones with Facebook features, along with other companies. London-based INQ, backed by Hong Kong telecommunications carrier Hutchison Whampoa Ltd., declined to comment. Li Ka-Shing, the billionaire who serves as chairman of Hutchison Whampoa, also has invested in Facebook.

“We’ve been working with INQ for a couple of years now to help them build a deeply integrated Facebook experience on their devices,” Palo Alto, California-based Facebook said in an e- mailed statement. “While we can’t speak for their future product development plans, we can say that our view is that almost all experiences would be better if they were social.”

One of the new phones is expected to feature a Qwerty-style keyboard and a touch screen, while the other would only have a touch screen and resemble the iPhone, one of the people said.

Europe First

The devices will go on sale first in Europe, where INQ has closer ties, through Carphone Warehouse Group Plc and several European carriers, said the person, who predicted a release in March or early April 2011. In the U.S., the phones may carry a price of less than $100 after AT&T subsidies and could reach stores in July or August, according to the person.

While Facebook will provide many of the features on the phones, the handsets will also offer other social services, the person said.

Facebook aims to add to the number of users who access its pages and view advertising, which generate much of its revenue. The company may double its sales to at least $1.4 billion in 2010 from $700 million to $800 million last year, two people familiar with the company said in July.

While Facebook’s mobile apps don’t currently feature ads, they probably will in the future, Forrester’s Ray said. Earlier this year, the company rolled out a faster mobile version of its site in about 45 countries and territories. And last month, it started a service that lets users share locations via handsets.

Tighter Links

Facebook said this week that it aims to better integrate its services with existing mobile software on devices. The social network is already on devices, including earlier INQ phones. Applications that provide access to the site are ranked among the top free apps on the iPhone and Android phones. The iPhone, which runs Apple’s iOS operating system, faces increasing competition from Android devices.

Hutchison Telecommunications Hong Kong Holdings Ltd., a unit of Hutchison Whampoa, is open to selling new devices, spokeswoman Frances Ng said. She wouldn’t say whether the subsidiary plans to sell a Facebook handset. Hutchison’s mobile businesses serve more than 40 million customers through carriers in countries such as United Kingdon, Ireland, Austria and Italy.

Technology blog TechCrunch reported on Sept. 19 that Facebook is building software for a mobile phone and working with a third party to create the hardware.

To contact the reporters on this story: Olga Kharif in Portland, Oregon, at okharif@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net; Greg Bensinger in New York at gbensinger1@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Peter Elstrom at pelstrom@bloomberg.net

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