MOUNTAIN VIEW, Calif. (

TheStreet)

--

Google's

(GOOG) - Get Report

Android

operating system may be viewed as a

shot in the arm

for

smartphone

makers

such as

HTC

and

Motorola

(MOT)

, but the OS is also key to the Internet giant's long-term strategy.

The tech heavyweight has been frantically extending its reach

beyond

its traditional search business into areas such as

video sharing

,

digital music

and

PC operating systems

.

Against this backdrop, Android represents a gilt-edged opportunity for the company to extend its desktop search capabilities into new areas. If Google is planning an OS war with

Microsoft

(MSFT) - Get Report

, then

smartphones

are the first significant battle.

With more than 10 devices and a number of service providers now in its camp, Android has done a good job

dislodging

the Windows Mobile operating system.

Apple

(AAPL) - Get Report

,

Research In Motion

(RIMM)

and

Nokia

(NOK) - Get Report

pose a stiffer challenge for Google, although the search giant is certainly establishing itself as an OS player.

"We think the adoption of Android so far has been better than expected, with nearly 20 devices expected to be available by the end of the year," commented Youssef Squali, an analyst at Jefferies & Company, in a recent note.

With low-cost, scaled-down laptops, or netbooks, fast becoming the consumer technology du jour, the stage is set for Google. Although Android is unlikely to feature in mini-computers, the Internet firm has laid the foundations for its

Chrome OS

to mount an assault on Microsoft.

Microsoft, for its part, is attacking Google in its back yard through its

Bing

offering. The software giant has also clinched a search partnership with

Yahoo!

(YHOO)

as part of its long-term plan to

challenge

Google.

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's

Android phones

, Google could be the biggest Android winner.

-- Reported by James Rogers in New York