Although Google itself refuses to budge from the official company line of confirming or denying nothing, it looks increasingly likely that a Googlephone is in the offing. Several sources are now claiming that prototype phone devices have been touted around the US mobile carriers in recent weeks (ironically you need just go Google to reveal the details) and the Wall Street Journal has reported that hundreds of millions of investment dollars have been poured into the project.

Amongst the more interesting developments to break recently has been speculation that Google might be contemplating becoming a mobile operator itself, fueled by insider gossip suggesting it is considering a bid for radio spectrum space.

But the most interesting of all the speculation comes in the shape of reports emerging from Singapore that suggest talks with High Tech Computer (HTC) in Taiwan, manufacturer of some of the most innovative and powerful smartphone devices on the market, have reached a conclusion. Those same sources say that a Linux software based handset will be ready for launch as early as the first quarter of 2008. This could make for the ideal partnership, as the HTC handsets so far are technically advanced but somewhat let down by the somewhat unstable Windows software that powers them.

I am led to believe that T-Mobile is the most likely candidate to ship the first Googlephone in the US, with Orange taking the European market. The Googlephone itself is likely to run an as yet unnamed Linux OS on a Texas Instruments Edge chipset.

The one thing that really isn’t open to speculation is that Google will use mobile advertising to fund this foray into the cellphone marketplace. After all, it already achieves revenues in excess of $40 million every day from its web based advertising, and the cellphone market is an as yet untapped resource for the Google marketing folk.

By combining Google applications and services with the advertising revenue on a Google specific handset, there is even the rather intriguing prospect of not having to pay a few hundred bucks for the hardware and a monthly fee to use it.

Could the Googlephone, in a move which would perfectly match it being Linux powered, be the first totally free cellphone?