Facebook is building a mobile phone, says a source who has knowledge of the project. Or rather, they're building the software for the phone and working with a third party to
actually build the hardware. Which is exactly what Apple and everyone else does, too.
It was a little less than a year ago that we broke the news that Google was working on a phone of its own - which was eventually revealed as the Nexus One. It was about that time, says out source, that Facebook first became concerned about the increasing power of the iPhone and Android platforms. And that awesome Facebook apps for those phones may not be enough to counter a long term competitive threat.
Specifically, Facebook wants to integrate deeply into the contacts list and other core functions of the phone. It can only do that if it controls the operating system.