Will the rumoured Facebook phone, “Buffy”, succeed?

The escalation of these ‘confirmed rumours’ may be the result of the iOS5’s integration with Twitter and Google’s acquisition of Motorola. “Facebook is building a phone because Facebook has to build a phone,” wrote Techcrunch columist MG Siegler.

Both HTC and Facebook have declined to comment on the issue, but numerous tech sites have pointed out that this was standard operating procedure for many tech companies.

Rumour or not, what would it take for a Facebook phone to succeed in the marketplace? Earlier this year HTC released the ChaCha which came with a dedicated Facebook button and the Facebook app has been one of the most downloaded.  So what can the social network possibly do to create a phone that will stand out?

Forbes contributor Ewan Spence is skeptical that the phone will succeed. “Don’t see how a single handset, even with the Facebook ecosystem shoe-horned into a mobile device, could have an impact in the marketplace,” he wrote.

Spence also pointed out that mobile network providers would be loath to push a phone that is essentially pure-data.

However, assuming there is a phone, Facebook’s target should be the emerging markets where, for many users, phones are their primary or even sole means of accessing the internet and loyalty to telcos is low, pointed out Ovum’s principal analyst Eden Zoller.

“Facebook would need to offer competitive pricing, particularly in emerging markets, as well as provide additional features and deeper integration or there will be no differentiation,” he said, adding that commenting on the phone’s specific features would be out of his remit.

The social network has also been steadily adding a growing range of services beyond its core platform, added Zoller. “Messaging, VOIP thanks to the deal with Skype, and additional content and applications… a mobile phone optimised for Facebook’s services would provide the ultimate platform and shop window."