No.1 - Google Phone?

If you thought the iPhone was the biggest thing to hit the wireless industry, brace yourself for the G-phone. The Wall Street Journal reports that Google is pouring money into developing a mobile unit of its own. Jim Goldman joins the guys from Silicon Valley with the lowdown.

Google (GOOG) spends billions of dollars in research and development and it appears that the company has earmarked over $100 million for this initiative, Jim says. The company is clearly looking into the mobile market, but a Google handset is not a forgone conclusion.

The issue for Google, Jim says, is that it’s a software company. Building a mobile phone for them would be like Microsoft (MSFT) building a PC. And the closest Microsoft has come to getting into the hardware space has been the X-Box, which loses the company millions of dollars. “Google hasn’t learned much from Microsoft, but this is a lesson they might want to keep close at hand,” Jim says.

What Google could really bring to the party in the mobile space is open access software. Trying to compete head-to-head with the likes of Apple (AAPL) and Nokia (NOK) in the handset space doesn’t make sense for Google, Eric says. What makes sense to him, is to spend the money to get Google applications on others’ handsets.

What it boils down to is mobile advertising, Jim says. It’s a $65 million industry this year but is projected to be a $2 billion industry by 2010 – and Google wants a part of that. There isn’t much question as to whether Google will be a leader in wireless software, Jim says. But a hardware initiative is another question entirely.