From Engadget: Google is working on a mobile OS, and it's due out shortly

Can it be true? Is the Googlephone nigh at hand? Not that we haven't been hearing this time after time (after time after time,
etc.), but we've actually got some hot news from a number of very
trustworthy sources about Google's plans for the mobile space. Namely,
Google's mobile device platform is well on its way, and will be
announced in the very near future.

We understand that the
"Gphone OS" (our name for it, not theirs) began development after
Google's very quiet 2005 acquisition of mobile software company
Android, started by Danger cofounder and former-prez / CEO Andy Rubin.
At Google, Andy's team has developed a Linux-based mobile device OS (no
surprise) which they're currently shopping around to handset makers and
carriers on the premise of providing a flexible, customizable system --
with really great Google integration, of course.

As for the
timeframe on this thing, we keep hearing Google will announce its
mobile plans some time post-Labor Day (September 3rd); from what we've
heard Google isn't necessarily working on hardware of its own, but is
definitely working with OEMs and ODMs to get them to put the Gphone OS
on upcoming devices. Think of it more in terms of Windows Mobile or
Palm OS (in the early days) -- Google wants to supply the platform, but
we don't think they want to sell hardware.
Still, don't entirely rule out the idea. Andy Rubin knows how to make a
device and put it in peoples' hands, so nothing is impossible on the
hardware side. Either way, we're totally stoked to peep the software,
we've been waiting for the Googlephone for years on years.

Still,
we can't help wondering what El Jobso thinks about all this. Apple has
been so buddy-buddy with Google lately, especially on the iPhone
-- and now Apple's mobile team is on the verge of outright competition
with one of its closest partners. We know that's how the industry
works, but it's got to sting a little, you know?