Although it has been some time since we heard anything about a Facebook Phone, today the rumors have been stirred up again thanks to a report from All Things D. The phone is apparently code-named "Buffy" after the vampire slayer from film and screen — though which company is getting "slayed" in this metaphor isn't exactly clear. It's certainly not HTC, which is reportedly the company Facebook has partnered with the build the hardware for the upcoming phone.
For the operating system, Facebook may be going down a path similar as Amazon did with its Kindle Fire tablet — taking the core of Android and radically changing it. Facebook's social features would be built deeply into the platform, of course, and apps would mostly come via HTML5.
Even if the phone were to be released tomorrow — or even in the next six months — it will be entering a very crowded mobile market. So far, Facebook has utilized its partnerships and, by extension, its ubiquity to stay a player in mobile. Should these rumors pan out, it will be interesting to see if Facebook can maintain friendly relations with all parties involved while simultaneously competing to steal marketshare away from them.