Sources tell us it will be a modified version of the Android operating system with deep native Facebook functionality on the homescreen that may live on an HTC handset. The evidence aligns to say this is the Facebook Phone announcement people have been speculating about for years.
The new OS is said to be a 'flavor' of Android that will build in all sorts of extra Facebook functionality. The project may even be named 'Facebook Home' in reference to a heavily Facebook-ified home screen that would display news feed stories and other data alongside easy accessible Facebook apps.
9to5Google reports that Facebook is teaming up with HTC to release a phone which will run the new software. Apparently, the companies have been working on a joint marketing campaign which will focus on the potential user of the device, not on the hardware or software.