Linux vs Windows - Conquering a Windows Based World

The internet is now buzzing with rumors of what exactly is the Google phone. Would it be a hardware that would compete directly with Apple’s Iphone, or would it be a Software OS that would run on any mobile phone and compete with Windows Mobile?  It probably makes more sense for them to create a Mobile Linux OS platform first.  This would then enable them to break any ties with Windows Mobile, and allow them to extend Google applications as well as advertising to the phone without relying on Microsoft.  Once that is in the place, they could then contract with  hardware vendor to create their own Gphone. This is also seems to be the opinion of Miguel Helft at the New York Times as quoted below.

“The essential point is that Google’s strategy is to lead the creation of an open-source competitor to Windows Mobile,” said one industry executive, who did not want his name used because his company has had contacts with Google. “They will put it in the open-source world and take the economics out of the Windows Mobile business.”