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No, I don't think there will be that much demand for a Google Operating System phone. It will be a niche. HTC and other manufacturer should be worried about potential customer demand. If you look at the market, there is already a good variety of operating systems for competition. Apple, MS, Symbian, Palm, Linux, etc, and plenty of hardware vendors.
With the introduction of Apple into the mix, THEY were the competition that the market needed for change. Google is not needed. All the handset makers had to step up their game to compete with the iPhone.
All the software companies are still currently trying to make the UIs much better.
Follow the money. Proof that there is enough competition in the mobile phone market is that Apple (the standard) has lowered their prices to compete with all the "iPhone killers."
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