This plan it full of landmines that Google can and should easily avoid. Some would argue that the iPhone is so successful because Apple's tight control over every aspect leads to a great user experience - and there's a lot of truth to that - but Apple's always been about selling you boxes. All the iTunes endeavors have been ways to prop up sales of their hardware, which have incredible profit margins. But this has been in Apple's and RIM's DNA since the beginning, and Google's bread and butter is the search advertising business. Its current multi-vendor hardware approach allows it to stay above the handset market share battles while laughing all the way to the bank as Android gets more and more mobile users online and in Google's reach.
Additionally, there's absolutely no indication that Google knows how to develop a high-end smartphone that will draw in the crowds. Andy Rubin had lots of experience with the Sidekick, but not everyone thinks that horizontal QWERTY keyboard is the best form factor. Google's Web sites are all very functional, but most people aren't clamoring about how well these are designed. An unlocked device would also be a tough sell for many U.S. subscribers because it would likely cost at least $500 if it had high-end specs, and I wouldn't even see the point if they went with a cheap, mass-market smartphone that's not as sophisticated as phones like the iPhone, Hero, or Palm Pre.
The hardware push would likely cheese off some of its hardware partners at a time when the Android Army is gaining momentum. The Motorola Droid is already getting some cool teaser television ads (see below), and early hands-on reports suggest it is a beast of a smartphone. The Boy Genius said the Droid is "the Android device to beat, and easily the most impressive phone we've used since the iPhone. It's positively amazing." There's absolutely no reason for Google to shoot the Droid in the foot because it's definitely going to garner a lot of attention.
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