Google allying with HTC to create Google Phone?

The rumor mill is spinning full cycle since yesterday after an insider at electronics manufacturer HTC sent Crunch Gear a tip about the “upcoming” Google Phone, supposedly set to launch in Q1 2008. According to the source, Google is looking at 20 different HTC models and refining the final handset design. The phone is said to have a special version of Google Maps that works with a built-in GPS and will have Gmail and Calendar compatibility. The device will reportedly double as a VoIP handset as well, seeing that the free Google Talk will also become a part of the suite.

Interestingly, today Engadget reports, citing “a number of very trustworthy sources”, that Google's mobile device platform is well on its way, leading us to believe that the so-called gPhone will be more of a software-suite that will be loaded onto various handsets instead of an actual mobile phone.

Whether any of this is true remains to be seen, regardless, the upcoming 700MHz auction in January will shed more light on Google’s plans for the wireless market.