What is the remaining dilemma for Google? I think Google has the capacity to entirely spec its own hardware, and therefore simply branding it something like "Google Smartphone" or equivalent (surely they can come up with something better, but you get the point). This maximizes the probability of keeping the project secret until the very end, and could perhaps enhance Google's ability to maximize the integrated user experience. That said, if Google feels that it could control the user experience built on a tightly controlled hardware chassis spec just like Microsoft Windows 7 Phone, it could at least try to see if a company such as HTC or Dell would be willing to bend to its total wishes and help it along with a branded hardware design.
Several powerful and many recent trends appear to point to the idea that Google will create its own alternative to Android, and that this alternative will be very tightly controlled -- at least as controlled as Windows 7 Phone, possibly as tightly controlled as iOS, BlackBerry or HP's WebOS. It would be able to make more secure devices, built on a pure IP data platform with only VoIP, and counter new competitive moves from Samsung and possibly Motorola Mobility, if they go their own independent cloud OS smartphone ways.
I call this strategy for Google "two torpedoes in the water" -- one being Android and the other being Chrome OS.
Timing? This project likely already started several months ago, and given the simplified lack of carrier certification (data-only and over-the-top VoIP tablet mode instead of circuit-switched phone mode), a 2012 launch looks very much realistic.
At the time of publication, Wahlman was long AAPL, GOOG and RIMM