By now we’ve all seen it, pictures at least: the Google Phone. Long rumored since before Android was even announced, it looks like Google is finally delivering their own hardware (manufactured by HTC) in the form of the Nexus One.

So far, the known hardware seems to be: a 3.7″ capacitive high-res (guessing 854×480) screen, a 1GHz Snapdragon processor, 256MB RAM / 512MB ROM, a 16GB microSD card, 5MP camera, and the usual assortment of radios: bluetooth, wifi, etc.

Update 1/3: The Nexus One actually has 512MB of RAM and a 4GB (upgradeable to 32GB) MicroSD Card.

While this may be one of the first Snapdragon phones to hit the market, what’s more interesting is way Google is supposedly selling it. The Google Phone will be available directly from Google as an unlocked GSM phone, which isn’t usually done here in the U.S.

Google also has an interesting opportunity here since they’ve recently aquired Gimzo5, which already had an SIP (calls over wifi) solution for Android. Combine this with Google Voice and you’ve got a cell phone that doesn’t need ANY kind of service plan, assuming you’ve got wifi wherever you are. You, of course, would be able to add a GSM data or voice plan (T-Mobile has some nice ones for people that provide their own phone) or even a cheap prepaid SIM card for emergencies. What will be interesting to see is if carriers allow you to purchase a data-only plan if something like this were to happen, as they’ll certainly be unhappy about no longer being able to nickel and dime their customers for each and every service.

So imagine this: rather than paying countless fees each month, you just get a simple data plan, which all the services on your phone are able to make use of. Imagine paying $59.99/mo (current standard rate for cell 3G cards) for unlimited Voice/SMS/Data/Nav/etc. And, if you’re not being tied in with long-term contracts, competition between carriers could bring that price down further.

One problem with this is our tendency to only look at up-front costs. I know at least a few people that either picked up (or seriously considered) the iPhone 3G when it dropped to $99, but these people fail to realize that the upfront cost of a phone is trivial compared to the cost of the plan they’ll lock you into. Consider that $99 iPhone. The bare minimum plan you can get away with is $69.99/mo (close to the cost of the device), or $1679.76 over the course of the two year contract (which is why I tell anyone looking at the $99 iPhone to pay the extra $100 for the 3GS). If you want unlimited messaging (they’re $0.20 for a text or $0.30 for a media message otherwise) that’s another $20.00/mo or $480 over two years. GPS Navigation? Sure, but it’s another $9.99/mo ($239.76). Assuming you want all these features? $2399.52 over two years. Assuming you never go over your monthly minutes, but don’t worry, we can up to unlimited minutes and bring the plan up to $159.98/mo, so you’d be paying a little over 1.5 times the cost of the device each month just to use it, and $3839.52 over the life time of your “cheap” $99 iPhone.

So, consider the alternative: Buy a phone upfront at full cost, let’s say $600 (probably more than it would be). As long as you have wifi, you wouldn’t even need a plan, but let’s assume your phone does need data, so you pick up a $59.99/mo data plan sans-contract. Over two years that’s $1439.76 for unlimited use. So, over two years, the $99 iPhone cost you $3938.52 and the $600 Google Phone costs you $2039.76. So, a 6x upfront cost leads to an overall cost of about half.

Right now this is little more than an idle daydream for me, but Google already lets you do SMS and Navigation using the phone’s data connection for free, and with a recent VoIP acquisition under their belts, which could be made to play nicely with Google Voice, maybe we’ll see something like this come along.