Google Phone Could Be Bad for VCs

Simeon Simeonov should think about giving up his job as a VC at Polaris Venture Partners and becoming a reporter. Check out his great post about a rumored Google phone on his blog, High Contrast.

The part that stands out for me is that the main guy is a founder of Danger (maker of the hip SideKick phone), which is backed by Mobius and a host of other VCs. I wonder what it means that Google apparently decided to develop a phone internally rather than just buy a company (e.g. Danger) and build on the existing technology. Has there been a change in Google’s M&A philosophy or is this just an anomaly? If it’s the former, that would be terrible news for VCs who would like to get a chunk of Google’s $11 billion in cash. Anyone know the particulars of this situation or want to weigh in on what it means?