First rumors of the CES in Las Vegas this year are spreading fast.

Will Google produce their own PC with their own Operating System?

Update: The Register also has an article on the Google PC.

L.A. Times writes:

Cheap PCs, anyone?

Google will unveil its own low-price personal computer or other device that connects to the Internet.

Sources say Google has been in negotiations with Wal-Mart Stores Inc., among other retailers, to sell a Google PC. The machine would run an operating system created by Google, not Microsoft’s Windows, which is one reason it would be so cheap — perhaps as little as a couple of hundred dollars.

Bear Stearns analysts speculated in a research report last month that consumers would soon see something called “Google Cubes” — a small hardware box that could allow users to move songs, videos and other digital files between their computers and TV sets.

Larry Page, Google’s co-founder and president of products, will give a keynote address Friday at the Consumer Electronics Show in Las Vegas. Analysts suspect that Page will use the opportunity either to show off a Google computing device or announce a partnership with a big retailer to sell such a machine.

And that’s not the only Google theory out there. Content producers wonder whether Google’s push into video search will unravel the economics that make Hollywood hum. If viewers can find and legally download an episode of “Seinfeld” through Google, will that cut into cable and network television’s profits?

And what if Google, after equipping cities, starting with San Francisco, with Wi-Fi wireless technology, starts to offer pay-TV service for free?

Still, to date, the company’s $123-billion stock market value is based almost entirely on its dominance of one business: global text searches on the Web. Some investors worry that Page and co-founder Sergey Brin could be done in by their penchant for seeing themselves as do-gooders rather than profiteers. But those naysayers are in the minority. Most industry executives and Wall Street analysts believe that Google’s search engine business is robust enough to give the young billionaires two or three years of wiggle room to build nifty services first and worry about making money on them later.