According to Steven Levy's "In The Plex: How Google Thinks, Works, and Shapes Our Lives", Google was working on two different phones in 2006 and 2007. The first was the phone Android was working on before it got acquired by Google - a BlackBerry-like device, called the "Sooner", which is the device Troughton-Smith got his hands on. The other was far more advanced, and was started after Google acquired Android. This one was called the "Dream", and sported a touch screen interface. This would eventually become the HTC Dream (or T-Mobile G1 in the US), the first commercially available Android device. So, what the heck happened to the Sooner?
The idea was to get the Sooner - which had seen the bulk of development before Android was acquired by Google - out the door first, to be followed later on by the Dream. Then, as we all know, the iPhone happened. The Sooner was dropped like a brick, and all development would focus on the Dream instead. Since Rubin was given quite some freedom in setting up his Android team within Google, he managed to attract a number of employees from Palm, like Dianne Hackborn, who obviously had quite some experience with touch input.
We already know what the Dream looked like round around that time - it supported multitouch, but it was limited, and by far not as advanced as the iPhone's touch input. Thanks to Troughton-Smith, we now also know quite a lot about the ill-fated Sooner, the dead end that never came to market because the iPhone made it pointless and a relic even before it was well and done.
The Sooner, or HTC EXCA 300, sports an OMAP850 with 64MB RAM, and came in both black and white. It had all the usual stuff (like a camera), but no 3G or wifi (so only 2G). According to Troughton-Smith, the device has a "certain quality to it". It runs build htc-2065.0.8.0.0, dated May 15, 2007, a few months after the iPhone had been announced.
It had no homescreen like we know today - it was just a clock with a Google search field. Interestingly enough, it did have an early version of the homescreen we know from Android today, but it was a separate application instead of the main launcher (Android still works that way today - multiple launchers on the same device). It came with the usual Google applications, too, like Gmail, Calendar, and as on. There's a lot of skeuomorphism going on, and thank god The Astonishing Tribe redesigned all that stuff for the Dream project.
All this shows just how much the iPhone's launch caused the industry to change gears. Sure, Google was working on the Dream before the iPhone, but it was considered a "long-term" project, and they were clearly in no rush to get it done. Then the iPhone came. Google made the right choice - suck it up and ditch the Sooner - while others, like Microsoft, Nokia, and RIM, had no idea what to do. They were simply too set in their ways, and couldn't, or didn't want to, see just what the iPhone meant.
Google was leaner, and quickly shifted focus from the Sooner to the Dream. The company was lucky it hadn't launched the Sooner yet, else it would be in a position more similar to the other players (i.e., having to support and promote/sell what would obviously be a dead end).
I love competition.