Is the Nexus One Google's own phone?

This weekend, it was hard to spend time online without coming across news from Google that it has been inviting its employees to participate in tests of a new mobile device.  This guarded announcement (there is sitll no official news) follows hot on the heels of persistent rumours about the launch of a new Google-branded phone, the Nexus One.

After taking the world by storm with its search engine, followed by a range of Internet tools and other software, is Google's next step going to be a move into hardware?

Whether or not that's the next step for the company, Google's mobile products blog caused a stir by mentioning a series of internal tests that its employees all over the world have been taking part in.  According to the blog, this new mobile lab features 'a device that combines innovative hardware from a partner with software that runs on Android to experiment with new mobile features and capabilities.'

That did nothing to scotch rumours, which were further fuelled by this photo, which was published on Twitter by Californian blogger Cory O'Brien, who suggested the new phone looks like an iPhone but with a bigger screen and a scroll ball at the bottom.

This prototype looks a lot like some recently leaked HTC handsets, and the Wall Street Journal has named the company as the devices's manufacturer, adding that it will be called the Nexus One.  Engadget then had the bright idea of looking on Picasa for photos taken with the device, and found plenty of shots taken on a 'HTC Nexus One', which geotagged the shots and seems to have a 5 Megapixel sensor.

Android 2.0 will power the next generation of handsets (with the first becoming the forthcoming Motorola Milestone), the Nexus One is already running Android 2.1.

One unique factor with this new phone is that rather than being distributed by network operators, Google is said to be ready to distribute the phone itself.  That means it will be unlocked and usable with any SIM card on any network.  Perhaps that will mean the networks will finally offer plans that only cover the cost of calls and messaging, rather than representing 24 monthly instalments to cover the cost of a phone that's worth £500 or £600 …

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