The Google Phone is indeed a real product, currently under full development by Google. Isabel Aguilera, the head of Google in Spain and Portugal, has officially confirmed (via Digg) that Google is developing a mobile device aimed at allowing users in developing countries to more easily access internet information directly from their phones. Additionally, Isabel Aguilera revealed that the Google Phone is just one of 19 projects currently under development by Google.
This is shocking news. Since it's targeted at developing countries, the Google Phone is likely not to be a high-end product but rather a low-end one. Therefore, we can no longer imagine it as the rumored Google Switch or the version reportedly being manufactured by Samsung. As a result, Apple's iPhone will likely continue with its high-end strategy, while Google's Google Phone might focus on the low-end market. Isabel Aguilera did not disclose any further details about the Google Phone.