Is Facebook building a phone? [UPDATED]

Rumours have started to surface that Facebook is secretly building a phone. Similar to the iPhone and Google’s Nexus One, it is understood that Facebook may be planning to develop the OS and employ a third party to manufacture its hardware.

Few details have emerged at this point but one of the biggest questions asked is why?
For Facebook, it’s become too risky to rely on others to bring their application to the masses. Like Google and Apple, Facebook has observed sharp increases in mobile traffic and needs to assert itself in the lucrative mobile ad market. A Facebook phone would also allow Facebook to gather more data from its users, and more data means more money.

Two Facebook employees said to be working on the project are Joe Hewitt and Matthew Papakipos, both with high levels of experience in developing operating systems.

Facebook will want to make the phone as accessible as possible so an affordable price tag would be expected.

Whether these rumours are true or not remains to be seen. Would you buy a Facebook phone? Let us know what you think in the comments.

Update: Facebook has since released a statement to Mashable denying this rumour. Instead Facebook say that they are working towards “deeper integrations with some manufacturers”.