There is speculation that google might go into the phone market. rumor has it that google is developing a phone (possibly to compete with ihpone) and the mobile subscription would be free! Of course, it would be ad supported - but I wouldnt mind a 5 second ad before making a FREE phone call.

Source: http://news.yahoo.com/s/nf/20070803/bs_nf/54384

From what I understand, Google apps are featured on the iPhone. I don't have one, so I'm not sure. But, why would they release a phone to directly compete with a phone that features their software? I'm not saying that it would suck, I love free stuff. But, I highly doubt that it will go through.

These stuffs are all rumours. How can a web product based company suddenly come up with a new mobile phone which requires very high technology infrastructure which google does not have at present.

This is surely an hoax. How can a web solutions company suddenly manufacture a mobile phone. Where will they get all the infrastructure them. Even though they have it. They must have officially made an announcement about it. It like saying Nike is manufacturing cars or Mercedes is manufacturing shoes.