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Dear Facebook: You Can Learn From The Ill-Fated "MySpace Phone"

This article is more than 10 years old.

If the rumors are to be believed, Facebook's about to jump into the hardware pool. And why wouldn't it? If the company is going to live up to the sky-high growth forecasts that fueled its massive (if flawed) IPO, it'll need to diversify beyond the simple socialsphere, and there's an obvious and immense value in merging their app and ad platforms with a built-to-suit handset. But if Facebook is going to succeed in the ridiculously crowded mobile market, it'd be well served to pull a few lessons from the nearest historical analogue to its upcoming journey: the ill-fated MySpace phone.

Of course, MySpace itself never actually manufactured a phone. But Helio—another company that has long since been left to the "Where are they now?" bin of forgotten tech companies—did.

Some history: In 2005, phone operator Helio launched as a joint venture between Earthlink and South Korea's SK Telecom. The company, which rented its network infrastructure from Sprint, was built on the premise that Americans were missing out on a whole lotta awesome Asia-only phones. In the pre-iPhone days, this was undeniably true, but rather than play up this fact in its marketing (Which. Was. Everywhere.), the company instead focused on its relationship with MySpace. You see: Helio phones had something the company (somewhat delusionally) thought would be its killer app: a MySpace button. And the ubiquitous TV ads all seemed to contain the line (often shouted by a manic character actor in the middle of a Hulk-grade rage episode): "It's got MySpace Mobile!" For a refresher, check out this ad:

The carrier's MySpace integration became its defining feature, and its phones were casually known as "MySpace phones". As PC World wrote in 2006: "The key element that sets Helio apart from other carriers is access to the popular social networking site MySpace. Although you can visit a MySpace page from other handsets' browsers, MySpace on Helio has been specially tailored to work well and look nice on a mobile platform."

The result: Crickets.

Helio's flagship stores were ghost towns. Walking by New York City locations, it was impossible not to notice that the (incredibly bored-looking) employees greatly outnumbered customers—if there were any. The company quickly burnt through hundreds of millions of dollars (the initial financing totalled $440 million, but the partners—in particular SK Mobile—poured a ton more cash into the abyss during the carrier's short life), but despite an omnipresent marketing campaign (Billboards! Magazines! TV! Blow-out parties! Tom Cruise?), the company never picked up any traction. By the time Helio eventually sold out to Virgin Mobile in 2008, it had just 170,000 subscribers. The fire sale price: Just $39 million, most of which was offset by a $25 million investment in Virgin Mobile by SK Telecom.

So what does this mean for Facebook and its unborn phone? Circa 2006 (when the first Helio handsets hit), the world wasn't ready for a phone that rode entirely off the coattails of a hot (and MySpace was red-hot back then) social network. And while Facebook is certainly a stronger all-around technology company (and better managed) than MySpace ever was, a lot of Helio's roadblocks still remain.

When Helio hit, I remember thinking that the idea of a Myspace Phone was fairly ridiculous, since any Internet-enabled phone could access MySpace. Today, Facebook has apps for just about every smartphone platform, and it's still not clear to me what added value they could deliver to consumers who signed up for their flagship phone. Making it more difficult is the fact that, were Facebook to reserve some features for its own device, it would almost certainly be the subject of an absolutely epic backlash from shafted iPhone and Android users.

To me, the clearest path for Facebook to worm its way into the handset world is to take the opposite tactic of Helio. Helio was targeted at big-spending consumers who were willing to pay extra for some flashy gear. As the New York Times story on the Facebook phone points out, the company is huge player in the ad world, and may be one of only two companies (the other being Google) with the infrastructure and ad base necessary to deliver an ad-subsidized low or no-cost phone. And given the choice between getting a Facebook phone with free service, and and just about any other phone that costs $100-or-so a month to keep in your pocket... well, you do the math.

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Seth Porges is a writer and co-creator of Cloth for iOS. For more fun,  follow Seth on Twitter at @sethporges, or subscribe to him on Facebook or Google+