According to Reuters, Google will have two versions of the Nexus One—one unlocked and one on a service contract with T-Mobile. The phone could be available directly from Google as early as January 5th.

"In the long term Google will become a seller and get commission from operators," the source said, adding that other operators are expected to follow T-Mobile's lead eventually and agree to Google's terms.

Reuters also quotes Baird Research analyst Will Power on how Google's choice to market their own phone shakes up the smartphone market, but mostly screws other Android makers:

"We expect the launch of a new competitive device to be directionally negative for most of the existing smart phone markers, including Apple, Research in Motion, Nokia Oyg, HTC, Motorola Inc, Palm Inc, Samsung and others, while perhaps most negative for the existing Android partners."

If Google's choice to go the traditional route with carriers is true, it would, of course, dash any possibility that they might be giving this thing away for free. Let's just hope the unlocked version comes cheap. [Reuters]