Steve linked to this article which mentions some information about a supposd mobile phone being developed by Google:

As the personal project of co-founder Larry Page, Google’s phone is also one of its best-protected secrets. When a report surfaced in the New York Times discussing the possibility of a mobile phone project, the famously grumpy Page threw a hissy fit, and the suspected leakers took the bullet.

We’ve been making enquiries too, and a picture is beginning to take shape. In August 2005 Google acquired a stealth-mode startup called Android, founded by Andy Rubin. Rubin was a veteran of Apple and General Magic, but is best known for leading WebTV and subsequently Danger Inc. Danger produced one of the most-photographed phones of recent years, thanks to Paris Hilton: its Hiptop was marketed by T-Mobile as the Sidekick.

The iPhone to many people in the USA is being looked at as the next revolutionary mobile phone device, while people in other countries view it as being nothing exciting.  This might be because the the FCC regulates the type of devices that are allowed to be used in the USA and so we always get the cool mobile phones a few years later than the rest of the world.

With Google already making such successful online apps, I don’t see why they couldn’t pull off a mobile phone, and I look forward to seeing how they do it.