Update: Yep, it's for real, Engadget has some deets.

Update 2: Yowza, this is looking like a really, really big deal. I am a little worried for Microsoft, but I am very worried for Palm. More details on that particular issue at TreoCentral.

Them's the rumors over the weekend. As we reported a month ago, it looks like Google intends to compete directly with Windows Mobile - offering not hardware but a full smartphone OS. They appear to have more than 30 partners on board - basically everybody you'd think that might be interested - and their OS should be full-featured:

Google will announce an open-source development system for mobile applications that will contain a full set of components, including an operating system, a set of common application programming interfaces, a middleware layer, a customizable user interface and even a mobile browser, according to sources. Instant messaging standard protocols will also be supported.

Read: Google to unveil mobile platform; target: iPhone?

Further rumors - Wind River is apparently going to be applying their embedded Linux know-how to the project. That particular bit should be interesting to those who followed the Foleo debacle, as Wind River was also on board for that project. Although many will see this as a shot at Microsoft, I'm willing to bet that it has Palm, planning their own Linux-based Smartphone OS, shaking in their boots.

The real challenge to Microsoft is that “Android,” as it is supposed to be called, is likely going to be offered for a license fee of approximately $0 to manufacturers. Some of the costs may be offset by some sort of mobile ad structure. I'm very skeptical phone-based could work - screen real estate is just too precious to waste pixels on ads.

The announcement is supposed to come at 11 Eastern.