"Verizon may see Google-powered phones as a means to better compete with rival AT&T Inc. (T) , which offers Apple Inc.'s popular iPhone, the report said. In addition, the report said, Verizon might see the move as economically attractive, as Google would likely charge licensing fees for its software that are lower than the industry standard. A partnership between Google and Verizon would be surprising, as the two companies have argued publicly over the use of wireless spectrum and cell-phone services."
According to Gartner Inc, Google phone could be tough sell to U.S. Carriers.
"An operating system would give Google another way to profit from sales of mobile phones, which outsold personal computers by more than 4-to-1 last year."
Roger Entner, VP for communications, IAG Research believes that "Google is developing a device that allows them to go directly to consumers. That works much better in Europe than here."
Until news is official and confirmed, watch this space.