Why Facebook Could Finance Your Next Phone...?

Facebook CEO Mark Zuckerberg at the unveiling of Facebook Home

Facebook Home was released last week for six new high-end smartphones. But Facebook isn’t going to make its mobile platform ubiquitous by targeting pricier devices; it needs to blanket the low end of the market too. Which is why you should expect the social network to start outright subsidizing smartphone and even tablet purchases.

Facebook unveiled its Facebook Home “apperating system” earlier this month, pitching it as a way to move the focus of mobile phone and tablets from software to people. The device should be a boon to users who spend a lot of time chatting and swapping photos on Facebook, but businesses will soon benefit, too: Facebook plans to show advertisements right on the lock screen of the device, interspersed with photos and status updates.

Such ads should earn Facebook a pretty penny, and they’ll be particularly lucrative if Facebook can target them based on location and other mobile phone data. Facebook Phone ads could be lucrative enough, in fact, to underwrite smartphone and tablet purchases.

Here’s how it might work: Facebook could offer to pay mobile subscribers’ out-of-pocket costs for a device like, say, the $200 Samsung Galaxy Note II. In exchange, Facebook Home would be allowed to show advertisements a bit more often on the device and to report back a bit more tracking data than it normally does (Facebook says Facebook Home tracks only the same data as Facebook’s mobile app, plus some anonymized app launching stats on rare occasion).

Facebook wouldn’t be the first company to offer ad-supported discounts on digital devices. Amazon does this already, knocking roughly 30 percent off the price of a Kindle e-reader for those willing to accept ads on the lock screen and holding down the price of its Kindle Fire tablet by showing ads on all of them. If you think about it, the entire ecosystem of devices running the Android operating system is advertising subsidized, since Google only gives away the mobile OS as a way of getting its ads into more smartphones and tablets.

Facebook has shown itself willing to embrace aggressive ad practices in other cases when other companies have already blazed the trail For example, it has defended its recent mining of users’ grocery store receipts and web surfing habits by pointing out that other online advertising aggregators already collect such data. When it comes to ad-supported phones and tablets, Facebook could say the same thing. And it probably will.