Good article from the Wall Street Journal on the potential benefits of the rumored Google Phone, as well as the significant challenges it will likely face:

Google Inc. is close to unveiling its long-planned strategy to shake up the
wireless market, people familiar with the matter say. The Web giant’s
ambitious goal: to make applications and services as accessible on
cellphones as they are on the Internet.

In a move likely to kick off an intense debate about
the future shape of the cellphone industry, Google wants to make it
easier for cellphone customers to get a variety of extra services on
their phones — from maps to social-networking features to
video-sharing. To get its way, however, the search giant will have to
overcome resistance from wireless carriers and deal with potentially
thorny security and privacy issues.

Google is trying to loosen the grip wireless carriers have over the
software and services consumers can access on cellphones. Carriers have
considerable clout, especially in the U.S., where they control
distribution of phones to consumers through their retail stores.