Will they position themselves in a niche, like Apple? Or just try and compete against Nokia and Motorola? Personally I think they'll produce a kind of communist everyman's phone -- designed to be cheap, useful and ubiquitous. The intention will be for all Americans to carry one. After all, the phone is intended to support their search/data mining core business, and you can't do that unless you have widespread coverage.
By making the OS open source, the company would enable developers to build applications specifically for the mobile environment, the same way they have done with most of their Web services.