Nick Bilton over at The New York Times technology blog is reporting that Facebook is getting serious about designing and releasing a smartphone. He quotes several anonymous Facebook employees and other Silicon Valley engineers in his report, stating that Facebook hopes to release a smartphone “by next year.”

Some of the anonymous engineers cited were evidently sought out specifically by Facebook for their expertise with smartphone hardware design. Some of them are or were Apple employees. Facebook has been recruiting individually for the project to keep details from leaking out in job postings. Bilton states that Facebook has already hired “more than half a dozen former Apple software and hardware engineers.”

It’s easy to see why Facebook would want to move into the mobile hardware business. The company’s IPO didn’t go precisely to plan, and now that it has to answer to investors on a quarterly basis, revenue will have to be a major focus. Facebook CEO Mark Zuckerberg told investors that mobile would be the key to the company’s future revenue. The recent release of the Facebook Camera App for iOS is proof that he meant it. From The New York Times Report:

“Mark is worried that if he doesn’t create a mobile phone in the near future that Facebook will simply become an app on other mobile platforms,” a Facebook employee said.

Zuckerberg’s fear is well-founded. Facebook will not have the control or amount of integration it wants (especially on iOS) unless it takes charge and creates both the hardware and software for mobile devices. Apple has demonstrated how to make locked-down communities profitable: good marketing and premium pricing. Facebook is on the right track if it’s looking to former Apple employees to help create a smartphone.

However, the smartphone market is looking pretty crowded these days. RIM is going down in flames, and even the Android market is consolidating, being taken over by Samsung. Is there really room for another competitor in the smartphone space, even one with as many members as Facebook? Also, does Facebook itself have brand loyalty, or is it simply the place where all of our friends are? We will find out in the coming year.

(via The New York Times)