Google is not only developing a smartphone, but it is experiencing delays, according to The Street. The financial publication cites a “source familiar with the situation,” who says that large teams are working on both the company’s Android software platform, and the so-called Gphone hardware. Despite this the latter is said to be encountering unexpected setbacks, and will not be ready until some point in 2009.

Google has generally denied the existence of the Gphone, but rumors of its existence have persisted for approximately a year. If it does exist a delay could prove dangerous, The Street comments; it will have to compete against an array of highly-publicized smartphones, including Apple’s 3G iPhone, Sony Ericsson’s Xperia X1, and RIM’s BlackBerry Bold. Third-party companies will also have their own Android phones.