Now knee-deep in the smart phone industry, Google has gained much in terms of experience.  While the first implementations of Android saw some mild enthusiasm, multi-touch ready Android 2.0 handsets like the Motorola Droid, available on Verizon in the U.S., are gaining even more traction.  One key to why Google's experiment has worked -- somewhat -- is that most of the hardware it uses is high-end enough so that cross-platform apps are feasible.

However, in a surprising decision the company is reportedly preparing to complete a complete 180, returning to the original rumored "GPhone" and looking to make it the foundation of its smart phone business.  The pivotal difference is that with the GPhone Google looks to write the majority of the software and tune the phone's experience, not just make the OS, as it has previously done. 

Rumors first cropped up when some loose-lipped Google engineers spilled the beans on Twitter.  Writes Google employee with Twitter s/n "identica", "Stuck in mass traffic leaving work post last all hands of 2009.  ZOMG we all had fireworks and we all got the new Google phone.  Its beautiful."

The phones handed out were reportedly unlocked.  A friend of another Googler, going by the s/n "GreatWhiteShark" chimes in, "A friend from Google showed me the Android 2.1 phone from HTC coming out in Jan.  A sexy beast.  Like an iPhone on beautifying steroids."

Google confirmed the reports, writing in its mobile blog that it was following an "eating your own dogfood" approach and testing "a device that combines innovative hardware from a partner with software that runs on Android to experiment with new mobile features and capabilities and we shared this device with Google employees across the globe.

Now more details are spilling out about what may be a huge launch for Google.  The new phone is reportedly named Nexus One.  Photos have leaked courtesy of Boy Genius Report and The Unlocked.  They show a curvaceous phone with one large button (similar to the iPhone's) and four smaller buttons in the screen margin.  The phone basically looks like a cross between an iPhone and a more curvy HTC Hero.

Reportedly the phone is powered by a Snapdragon processor.  Developed by Qualcomm, demoed chips featured speeds of 1 GHz or faster.  The latest chip, the QSD8672 featured dual cores running at 1.5 GHz with integrated HSPA+, GPS, Bluetooth, high definition video recording and playback, Wi-Fi and mobile TV technologies (MediaFLO, DVB-H and ISDB-T).  It is unknown which variant of Snapdragon Google will use (the Toshiba TG01 smart phone was the first mobile phone to use the 1 GHz variant).  The GPhone is also rumored to be packed with a OLED touchscreen (no keyboard) and dual mics for killing background noise.

The phone will feature GSM -- meaning it will work with AT&T or T-Mobile networks in the U.S.  Reportedly the phone will only be retailing unlocked, setting a tough standard that may give Apple, and others who have opted for an exclusive carrier, a headache.

Reportedly the phone will also get an even-more-refined version Google's voice-driven search, one of the hottest features on the Droid phone.  Google is eager to get users searching on Android handsets as more and more traffic shifts online.  The foundation of Google's business is advertising, and with mobile phones becoming increasing ad-ready Google feels the time is now to strike. 

In November Google purchased AdMob Inc., a mobile advertising firm.  Google hopes that its hardware and software efforts will give it a unique edge in a market that's expected to reach $2-3B USD by 2009.

A Google phone could come at a pivotal time for the company's mobile efforts.  Microsoft, struggling in the mobile industry, will soon launch its own first-party phones, dubbed "Pink".  And a summer iPhone refresh Apple seems like a safe bet.  Can Google crash these competitors' parties with a GPhone?  That remains to be seen, but we're sure watching carefully to see how this one develops.