A new report surfaced Tuesday that Google's hell-bent on making its own mobile phone operating system, adding to the rumors that a prototype could be released soon.

Engadget is reporting that we could hear official news from Google about its plans for a handset-optimized operating system in September. The newest report falls into the more likely category--at least in my opinion--that Google would be working with existing phone companies on a device that uses a Google-developed operating system and suite of mobile applications, not building its own hardware.

The appeal for Google is simple: mobile phone growth is exploding, and it's the future of computing. It's not a perfect analogy, but it's almost like the early days of the PC industry when Microsoft hadn't yet come to dominate the industry and there were several different ideas for software to run those new-fangled PCs.

Google's OS is supposedly based on Linux, and designed to work well with its existing applications. If the rumors are true, Google will find itself in new ground competing against Microsoft, Palm, Symbian and its good buddy Apple.