Before the 2008 launch of the G1 on T-Mobile, before the Android 1.0 portrait QWERTY physical prototype shown off earlier that year, there was the "Google Phone." This device simple prototype was shopped around to carriers by Google as early as 2006.
Google's first public Android prototype device, shown off in 2008:
Images of the device were unveiled in the ongoing litigation between Google and Oracle over the use of Java code in the Android operating system. Oracle believes that the images were pertinent to the case as the slides in which the images were presented frequently mention Java.
This device was being presented to carriers before the iPhone launch of 2007. The modern idea of a smart phone was still foreign to carriers at the time. Google had to emphasize that such a device would not be intended to undermine the carrier. The user interface and 3rd party app solution had yet to be developed at the time but Google assured T-Mobile that the carrier would still be the one to directly charge the consumer. Google's business model has always been to create services which were a delivery vehicle for advertisements.
The Google Phone was to come with a processor of at least 200MHz, 64MB or both RAM and ROM, miniSD expandable storage, and a QVGA (320x240) display which doesn't even seem possible in this age of the 720p display on the Galaxy Nexus or the iPhone's Retina Display. A touch screen wasn't even required in this early stage.
The device revealed today wasn't the only Android progenitor making the rounds at Google's Mountain View campus in 2006. They had an early version of Android running on prototypes in three different form factors. All of these early versions were running on the TI OMAP850 processor.
Google even had a few applications up and running at this early stage of development. Early versions of the home screen, dialer, browser, contacts and messaging apps were ready. Google also promised more features such as Google Talk, Gmail, Calendar, MMS, and a "chat-based SMS" service would be available in Q3 of 2006.
It appears that Google had Android far more complete far sooner than we had previously thought. They had hoped to have Android devices certified by carriers between June 1 and August 31 of 2007. It would be nearly 2 years before the first publicly available Android device, the HTC G1, was released on T-Mobile.
Source: The Verge