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Google Inc plans to sell two versions of its own-branded cellphone: one with a service contract with T-Mobile USA and another that is unlocked, a source familiar with the matter said.

The phone, manufactured by HTC, has a number of code names such as HTC Passion, Dream or Nexus One and could be available directly though the Google website as early as Jan 5, according to the source.

Google said on its official blog on Saturday that it was testing a new mobile device with its employees. Media reports have said that Google will sell an unlocked version of the touchscreen phone, allowing consumers to pick a carrier of their choice to provide wireless service.

Another version will be linked to Deutsche Telekom's T-Mobile USA, which will subsidize the cost of the phone for US consumers who agree to a service contract, the source said. Pricing details were not available.

'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.

The phone is similar to Apple Inc's iPhone but has, among other features, an exchangeable battery, a somewhat larger screen and the ability for consumers to add a memory card to the device. Any operator who wants to make the phone available to its customers will have to go through Google, the source said. -- REUTERS