Google Searches For Android Gains

Such is the importance of smartphones, however, that Google is even rumored to be planning its own device. Bypassing telcos to sell the phone directly through retailers would undoubtedly be a bold move, but would underline the company's desire to gain wireless share from Apple, Nokia and Microsoft.

Last week the search giant spent $750 million to acquire mobile-ad specialist AdMob. With Android phones such as Motorola's Droid starting to catch on, the purchase is seen as a shrewd move.

"We view Google's $750 million all-stock acquisition of AdMob as a strategic move, potentially accelerating the company's growth in the mobile ad market the way DoubleClick expedited its entry into Display advertising," wrote Jefferies & Company analyst Squali in his note.

The analyst explains that while Google will not generate revenue from the open-source Android OS, AdMobs could significantly boost the company's advertising revenue.

"Over time, we believe Google would embed some of the AdMob technology platform deeper into Android to make the core of the mobile OS more advertising friendly," he said. "The company's aggressive forays into mobile should put additional pressure on other leading advertising players such as Yahoo!, Microsoft and AOL to come up with a more aggressive mobile monetization strategy."

At least one analyst believes that Google also could reap the benefits of the e-book boom through the Android OS.

"Google, which recently announced a browser-based e-reader, could offer applications for Android-based devices of various form factors," said Allen Weiner, research vice president at Gartner, in a recent statement.

Despite all the noise surrounding Motorola's Droid launch and HTC'sAndroid phones, Google could be the biggest Android winner.

-- Reported by James Rogers in New York