Earlier this year, Google’s Marissa Mayer argued that Google wasn’t coming out with a piece of mobile hardware, as she explained that the iPhone has dramatically boosted use of Google Maps and other mobile services. Yet there have also been articles quoting people who say they’ve seen a “GPhone.” Miguel Helft’s piece this morning in the New York Times may clarify a bit what’s going on. While Google may have developed handset prototypes to demonstrate mobile software, it’s very likely (as the article suggests) that the GPhone is a mobile OS “to compete with Windows Mobile.”

According to the article:

Google wants to extend its dominance of online advertising to the mobile Internet, a small market today, but one that is expected to grow rapidly. It hopes to persuade wireless carriers and mobile phone makers to offer phones based on its software, according to people briefed on the project. The cost of those phones may be partly subsidized by advertising that appears on their screens. . . .

In short, Google is not creating a gadget to rival the iPhone, but rather creating software that will be an alternative to Windows Mobile from Microsoft and other operating systems, which are built into phones sold by many manufacturers. And unlike Microsoft, Google is not expected to charge phone makers a licensing fee for the software.

I and others have argued that it makes more sense for Google to develop mobile software (including an OS) rather than hardware. And the New York Times article likely answers the question of why people have seen what appear to be branded phones while Google isn’t developing a mobile phone per se. If the timeline suggested by the article is correct, the mystery will relatively soon be over — there are only two-and-a-half months left for Google to unveil anything in 2007.

Google CEO Eric Schmidt has previously floated the possibility of ad-subsidized mobile phones. He told Reuters earlier this year, “Your mobile phone should be free. It just makes sense that subsidies should increase,” as advertising grows on mobile phones. The UK’s Blyk has just launched — the first significant test of the viability of such an idea. Yet Google is perhaps the only entity right now that might be able to successfully pull off an ad subsidized mobile device on any kind of scale, given its market position and the volume of advertisers it has. There is evidence, however, in the form of consumer surveys, that users are resistant to ads on their phones even if it subsidizes the cost of those phones or the airtime.

The totality of Google’s mobile push (OS, spectrum licenses, etc.) means that AT&T and Verizon will likely see Google as a full-blown competitor (Sprint has a relationship with Google for WiMax development), as the New York Times article suggests, and do their best to keep any Google OS off of handsets they sell or decline to sell those handsets that do have it. In Europe and elsewhere in the world, markets are more open and so operators would be less able to block handsets carrying a Google mobile OS.

Here’s Danny’s previous GPhone timeline and more coverage of Google’s mobile efforts from our Google Mobile archive.

Related Topics: Google: Mobile

About The Author: Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling. See more articles by Greg Sterling