A TikTok smartphone is a credible threat to Facebook

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• ByteDance, the Chinese company best known for making the TikTok app, will develop its own smartphones, the Financial Times reports.
• The phone would come pre-loaded with ByteDance apps, such as a news feed app, content discovery service, and TikTok.
• ByteDance is one of the few new social media companies to break Facebook's dominance, and is also one of the only Chinese software companies to boast a big global userbase.
• Its immense popularity with young people and in emerging markets means it is already a credible threat to Facebook. A popular phone could cement that.
  
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The smartphone market is extremely crowded, but the company behind wildly popular video app TikTok is hoping there's room for a new player.

According to The Financial Times, TikTok parent firm ByteDance is hoping to use its acquisition of consumer electronics firm Smartisan to enter the smartphone market for the first time. The firm is working on a phone that would come pre-installed with a bunch of its own apps, such as newsfeed, content discovery, and games.

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Read more: TikTok's parent company wants to make a smartphone

There are still key details we don't know, such as whether this would be a phone that runs on a fork of Google's Android, which seems most likely, or its own new operating system. We also don't know whether a ByteDance phone would be sold outside China, but the Financial Times billed the phone as ByteDance's way of cementing its global reach, so that seems likely. Finally, we don't know anything about the specs or cost of this new phone, meaning we don't know if it's going to be a high-end iPhone competitor or another cheap Chinese device.

And there are lots of questions about whether ByteDance is capable of building a competitive phone in a crowded market. ByteDance is known for its popular apps, not for building phone camera hardware or industrial design.

With these caveats in mind, it's clear that ByteDance wants to create its own ecosystem, posing a credible threat to Facebook. And that is an interesting proposition given its huge popularity outside its native China.

ByteDance is already a threat to Facebook because TikTok is super popular

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ByteDance has gained a huge global user base thanks to TikTok, the popular short-form video app. TikTok surpassed Instagram for global downloads last year, an unusual achievement in a social media market dominated almost entirely by Facebook. It marks the first credible threat Facebook has faced in social media in years.

If ByteDance can parlay TikTok's popularity into hardware, the firm has the potential to create its own social media ecosystem. Facebook is trying to do the same by stitching together elements of Instagram, WhatsApp, and Facebook Messenger into one all-powerful private messaging platform, but it is still struggling in the hardware space and faces high consumer suspicion and distrust. Facebook is also thought to be losing rather than winning young users to its main app.

That isn't to say it will be easy for ByteDance to translate the global popularity of one app into consumer demand for a phone. Snapchat is also a hugely popular app with young people, and its attempts to edge into hardware have gone badly to date. ByteDance can also, perhaps, learn a lesson from Facebook's failed attempts to make a phone in 2013.

ByteDance already has a successful ecosystem of apps, especially outside Western markets

ByteDance seems to be planning on integrating its full app roster into its smartphones. That could include not only TikTok, its best known app globally, but also its popular content aggregator Toutiao, and work collaboration tool Lark. ByteDance's suite of apps is still pretty nascent, but they are extremely popular outside of Western markets.

Take India, where TikTik is the most downloaded app today, and ByteDance-owned news app Helo is the fourth-most downloaded.

That's a better performance than Facebook, with WhatsApp the second most downloaded app and Messenger the eighth most downloaded app.

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ByteDance could afford to take a hit to make its phones popular

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ByteDance could copy Amazon and sell hardware at a loss.

ByteDance is the world's most valuable startup, and sitting on a huge amount of capital to try and make its smartphone ambitions work. The firm is backed by the deep-pocketed SoftBank, last raising $3 billion in 2018 at a valuation of $75 billion. It may also go public. That suggests the firm could afford to take a hit on hardware in order to make its phone and software more popular, just as Amazon did with its Echo speakers.

A TikTok phone would need to be cheap

If your hardware is going to act as a Trojan horse for your software, as the Amazon Echo does, then it's going to need a pretty compelling price point. Amazon, another deep-pocketed company, chose to sell its hardware at a loss in order to make sure its Alexa voice assistant got inside millions of homes.

Facebook discovered in 2012 that $99 for a Facebook-themed smartphone was too expensive (the price eventually dropped to $0.99). Given the preponderance of cheap Android handsets available on the market now, a TikTok-themed phone is going to need to look pretty compelling. Still, having acquired phone maker Smartison, the firm could find ways to keep costs down in a way that rivals couldn't.

There are, evidently, lots of hurdles to a TikTok phone. But should Bytedance succeed, it could tip the balance of the social media ecosystem.