Apple Talk: Is Facebook friend or foe for Apple?

With rumours swirling that Facebook is working on its own smartphone, what does this mean for its relationship with Apple?

The smartphone market - soon to be simply the phone market - has all the hallmarks of being a two horse race.

Android and iOS are resolutely crushing the life out of the competition. Given this situation, what is the incentive and chances for a completely new tilt at the smartphone market by a completely new competitor, like Facebook?

According to some reports, the social network is gearing up at another big push at making a phone - both hardware and software.

If Mark Zuckerberg was taking heed from Steve Jobs as the latter's biography suggests, he may have taken on board the Jobsian axiom that it's better a company delivers both hardware and software and not relying on third partners, a belief he inherited from US computing pioneer Alan Kay.

Facebook has a history of trying to get into mobile. It is, after all, increasingly the future of both computing and the social web. Reports first circulated then dissipated in 2010 about a Facebook phone, and last year talk of a collaboration with HTC emerged, codenamed 'Buffy'.

More recently, reports emerged this month in the New York Times of Facebook poaching Apple iPhone and iPad engineers to work on a new mobile project.

Just as Apple has done, Facebook could exert full control over its user experience if it built its own hardware. Why settle for being just an app when you can have the whole phone?

There's no doubt also that Facebook could make a very good phone, at least in developing a platform. It has all the potential to be a compelling user experience. It has the engineers, the content, the apps and most importantly some 800 million customers bought into its consumer-friendly brand.

It has an operating system that supports messaging, calendars and events and is the living and breathing embodiment of the social web.

Something certainly needs to change as Facebook's current mobile strategy is baffling. Its iOS apps are crushingly slow and unresponsive.

Facebook's possible entry into the market is less likely to concern Apple as it will Google. Facebook is not really an Apple competitor but it does compete with Android and will increasingly do so over web advertising revenue.

Facebook's standard response to queries on its mobile strategy is: "We're working across the entire mobile industry; with operators, hardware manufacturers, OS providers, and application developers."

A Facebook phone would be interesting for the market. But really, at this point, even with the combination of Microsoft-Nokia struggling to generate any momentum in a market dominated with two major players, does Mark Zuckerberg really want to dive in?

Most significantly, the company has no background of making mobile hardware. Facebook would have to build a whole hardware research, manufacturing and distribution model from scratch.

Partnership with existing hardware manufacturers seems a far less risky option, but more of a compromise for Facebook in terms of the experience delivered to users. In addition, its choice of sustainable partners is diminishing.

Another interim possibility is deep integration of Facebook within iOS. Twitter integration on iOS has been a revelation with the social network integrated at a system level on many native iOS apps. Sharing via Twitter on iOS is intuitive and natural, there's no need to switch to a dedicated  app.

Ahead of the keynote speech at Apple's Worldwide Developer Conference next week Facebook integration with iOS is being seen as a major possibility for the next major iteration of Apple's mobile software iOS 6.

At an All Things D event last month, Apple CEO Tim Cook hinted at greater co-working between Apple and Facebook. He described the relationship between the two companies as “very solid" and added: "I think we can do more with them."

That naturally doesn't rule out a possible Facebook phone. It has all the software assets it needs, as well as the $16bn it raised from its IPO, not to mention its recent acquisition of Instagram.

It's a compelling idea for a company which has so many of the necessary ingredients as well a vast existing customer base but a fiendishly difficult trick to pull off, especially from a standing start in a market increasingly dominated by two major players and established companies falling by the wayside. A big ask but a huge prize.