The gPhone is not going to go up against the high-end fashionable iPhone, but will more than likely be closer to a sub-$100 laptop giving internet access to all, increasing Google users and therefore advertising revenue. Google has also supposedly been in talks with various networks recently, including T-Mobile, Verizon in the States and Bharti Airtel and Vodafone Essar in India. This would make sense if the company are looking to get more advertising revenue from users who might not already own a computer.
Rumours abound of an announcement next week, possibly to confirm a partnership with a handset manufacturer. This could also point to Google licensing the OS only, and not producing the hardware themselves.
Both Samsung and HTC are reported to be working on a possible gPhone complete with Google Maps and GPS, compatibility with gMail and the calendar application. The handset may also include a version of Google Talk adding VoIP capabilities.
We’ll just have to wait and see what the next few weeks bring.