The long-standing rumours about a Google phone are true, according to Wall Street Journal report. The newspaper went on to say that Google employees are currently using a prototype of the Google device, dubbed the Nexus One.

The phone e hardware is allegedly from HTC - from the same mold as the HTC Passion. Based on the current rumours, the Nexus One runs on the blazing fast Snapdragon processor, has a super high-resolution OLED touchscreen, and will be thinner than an iPhone.

Google is expected to market the Nexus One direct rather through any wireless carrier partnership. It is expected to be an unlocked GSM-based device which will be available in early 2010 - possibly as early as January. 

The number of Android-based handsets has exploded this past year. T-Mobile, Sprint, and Verizon each offer mobile devices built on Android. The most notable of these have been the recent release of the Motorola Cliq with T-Mobile, and the massive unveiling of the Droid from Verizon.

Google competing directly against Android-based devices from third-party manufacturers could ruffle some feathers. HTC, the company rumoured to be producing the actual Nexus One hardware, has a variety of its own Android-based handsets planned for 2010, and the Nexus One would compete head-to-head with them.

Vendors like Motorola and Samsung, which have embraced the Android platform, may revolt - or at least shop for a new mobile operating system alternative rather than competing with Google. If the Nexus One is built on Android 2.1 as rumours have suggested, there could also be charges of unfair competition and predatory practices since the current version available to other vendors is Android 2.0.1.

The FTC might approve if Google markets the device direct, unlocked for use with any GSM-based carrier as suggested. Device exclusivity is a recurring issue and one that the FTC is currently exploring as a part of its widespread attempt to rein in the wireless industry.

Users - both consumers and businesses - may not want to unleash that genie, though. Purchasing straight from Google implies that there won't be any contractual obligation for service, but there also won't be any handset subsidy either. As much as small business customers and consumers complain about contractual commitments and early termination fees, they also enjoy being able to upgrade to the latest technology every couple of years without having to pay full price. 

The Nexus One may be an attempt by Google to borrow from the Apple playbook. Although the hardware is from HTC, rumors suggest that Google has dictated every last detail of the hardware specifications and is customising the Android experience to be uniquely Google.

As successful as recent Android-based devices have been, perhaps Google feels that none of them are truly living up to the potential that Android has to offer, and that only Google has the vision to deliver on the promise of Android.