Once upon a time Michael Arrington broke the news that Facebook was developing its own phone. That was in 2010. However in a followup interview with TechCrunch, Mark Zuckerberg killed the notion, saying they’re pursuing a horizontal strategy that will put a social layer on top of existing platforms. “We’re not trying to compete with Apple or the Droid or any other hardware manufacturer for that matter,” he said.

But now, two years later, that strategy may have changed.

A new report hit today stating that Facebook and HTC are co-developing a customized Android smartphone. This phone, said to be developed exclusively for Facebook, would integrate all of the social network’s functions into the mobile platform. Per unnamed industry sources, the device would launch at the earliest in the third quarter of 2012.

Since Arrington’s first post on the device, such a phone has yet to hit the market even though Facebook has worked closely with HTC and INQ on phones with deep Facebook integration. But those were underpowered Android phones with Facebook buttons and not devices Facebook would want to champion. Then, late last year, a new report rekindled the Facebook Phone fire.

The mobile landscape has changed drastically since Zuckerberg shot down our initial report. Smartphones are now outselling feature phones in key markets. Android is the dominant mobile platform and the cost of quality hardware has dropped. Plus, and perhaps the most importantly, the Amazon Kindle Fire has shown that you do not need Google services to be a success.

Today’s report seems to suggest that the so-called Facebook Phone would use a completely customized Android OS. There’s a real possibility that HTC and Facebook will opt for a complete reskinning of the OS, thus forgoing Google services such as Google Play, Gmail, and Google Maps. That might be a deal breaker for some potential buyers, but the Facebook brand is arguably as strong as Google’s. A proper Facebook Phone can standalone.

HTC’s latest handsets show that the manufacturer has upped its game. The hardware is spectacular and HTC’s Sense 4.0 Android overlay is equally as impressive. HTC has the goods to build an industry-leading handset. If this phone really exists, it’s set to be something special.

The latest report states that this phone will not come out prior to the third quarter. Even that target might be optimistic. Given this rumor’s track record, it’s probably best not to delay a phone purchase to hold out for this device.

This content was originally published on Tech Crunch.

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