According to a report by the Wall Street Journal, when Android was still in development by Google, they had a deal with LG to manufacturer the OS’s first phone. The possible reason? They didn’t like that Google wanted a full touch screen on the first Android device when they had already been developing one themselves with the LG Prada.
However, LG backed out of the deal in 1997. Instead, the company worked on some of their other devices at the time, like the Chocolate series and some other smartphones, like the Prada. They then created a partnership with Windows Mobile in 2009, which we all know by now that Microsoft has shifted their focus to Windows Phone 7.
When LG backed out, Google turned to HTC, which s now the 4th largest smartphone manufacturer.