According to this article on Noticas.com (I provide the translation below):
Isabel Aguilera, Director General of Google in Spain and Portugal, has confirmed to Noticias.com that the company is working, “among other things”, on the development of a mobile telephone. “Part of the time of our engineers has been dedicated to the investigation of a mobile telephone which can access information”, Aguilera said to this portal.
The speculations on the possible entrance of Google into the area of design and sale of mobile telephones arose after the company recently published an ad in which it looked for engineers and analysts specializing in telecommunications. In that same ad, Google specified that it is in the experimentatal phase with diverse systems of wireless communications.
At a conference on the integration of Internet into business strategy, organized by the Association for the Progress of the Direction of the Mediterranean Zone, Isabel Aguilera has explained to Noticias.com that although 70% of the engineers' time is dedicated “to develop our nucleus of business, that is to say, search and advertising”, and 20% to develop “products that they have something to do with this nucleus”, is clear that 10% of that time is centered on product development “that at some time could have to do with our business”.
Within this last scope, Aigulera has indicated that “it has been investigating” a mobile telephone which can “access information”, in “a manner which extends the information society to devloping countries”. In this sense, the Director General of Google in Spain and Portugal has said that while “the products can seem strange, all comprise of our process of innovation”.At the moment, the search engine has 36 products and “18 others that are in laboratory” and, therefore, in the experimental phase, including the above mentioned mobile telephone.
This confirms weeks of speculation. I apologize for any errors in translation; they are my own. Please post a comment if you see any such errors. Thanks.