Count this as a win for TechCrunch. A month ago Michael Arrington wrote that the Google phone — not just another phone running Google’s Android OS — was real, and was coming soon. On Friday, we received confirmation of the phone’s existence after Google apparently distributed the devices to employees, and they started tweeting about how awesome it was.  The pull quote of the evening came from Twitter userGreatWhiteSnark: “A sexy beast. Like an iPhone on beautifying steroids.”

On Saturday, we received even more details. Google confirmed that they handed out the devices for “dogfood testing”, Daring Fireball says it’s calling itself the “Nexus One”, and TechCrunch’s sources say that it will be called the “Google Phone”, sold as an unlocked GSM device, and will launch in January. It’s being built by HTC, and is apparently very fast — which leads many to believe it contains a 1Ghz+ Snapdragon CPU (which will hit many phones in 2010). The latest word fromDaring Fireball is that the phone may only work on T-Mobile’s 3G wireless bands (and on AT&T’s Edge data), which doesn’t make much sense at all, and will most likely be debunked soon.

So where does this leave Apple? For one, it means that Google is no longer competing with them in a roundabout way with Android — the name Google Phone is obviously directed squarely at the iPhone. And while the phone was built by HTC, word is that the device was made to Google’s specifications. Future phones could very well be built by Google, which also puts them in direct hardware competition with Apple.

That the phone will be unlocked is also alien to the U.S. cellphone market — where an unlocked phone usually equals an unsubsidized (and very expensive) phone. I don’t see Google being stupid about this and offering the device at an exorbitant price though, despite what some may think. Google will do everything in their power to make this phone succeed, and I wouldn’t be surprised if they subsidize it themselves at first. (This is the beginning of a path that I believe will lead to Google offering free Android devices, but that’s several years down the line.)

Ultimately, the Google Phone’s existence means that Apple needs to make sure the next iPhone is just as fast, which lends some credence to the 1Ghz+ rumors floating around. (Perhaps the multicore rumors will also end up being more than fiction.) The phone is also apparently thinner than the iPhone, and features a bigger, OLED, screen. Given that the Nexus One has quickly toppled the Droid as the highest-end Android device, you can bet that Apple is eying its specs closely.