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Why Google Loves Apple's iPhone

Google is wielding its Android OS like a cudgel against Apple and RIM. But CEO Eric Schmidt still proclaims he loves the iPhone.

MOUNTAIN VIEW, Calif. (

TheStreet

) --

Google

(GOOG) - Get Report

is wielding its Android operating system like a cudgel against

Apple

(AAPL) - Get Report

and

Research In Motion

(RIMM)

. So why does Google CEO Eric Schmidt love the iPhone so much?

The answer, as revealed to journalists at the

Techonomy conference

in Northern California's Lake Tahoe this week, is all about money.

"I love the success of the iPhone, because the iPhone also uses Google search," explained Schmidt. "Google gets a good chunk of that revenue when people search on the iPhone."

Schmidt did not reveal how much money the iPhone is worth to Google, but he did provide an update on the search giant's own mobile OS.

Google is now activating 200,000 Android smartphones a day, said Schmidt, up from just over 100,000 in June. New phones such as

Motorola's

(MOT)

Droid X and

Samsung's

Galaxy S are helping drive this demand, he added.

"There are many, many more handset partners coming, so it looks like Android

demand is not phenomenal, but incredibly phenomenal," explained the CEO. "We could not be happier in terms of Android."

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Recent research would seem to support Schmidt's Android optimism. Earlier this week research firm the

NPD Group

released figures showing

that Android had overtaken RIM

as the most popular OS on U.S. smartphones.

Android accounted for 33% of all smartphones purchased during the second quarter, ahead of RIM's 28%, according to NPD. Apple's OS featured on 22% of smartphones sold during the quarter. Android's gain also marked the first time since 2007 that RIM has fallen into second position in the OS race.

Speaking in Lake Tahoe, Schmidt explained that, because Google makes most of its revenue from advertising, Android is proving to be a big money-spinner. With a Google Web browser embedded in the operating system, users clicking on ads are generating revenue for the tech bellwether, according to the CEO.

Google grew its overall revenue 24% year-over-year to $6.8 billion during its recent second-quarter results, with revenue from the company's Adsense advertising technology rising 23% to $2.1 billion.

Google is also touting a new, faster, version of its mobile OS, Android 2.2, dubbed

Froyo

. Earlier this week,

Sprint

(S) - Get Report

started rolling out the Android 2.2 update to customers with

HTC's

Evo 4G phone. Android 2.2. also features

Adobe's

(ADBE) - Get Report

Flash player 10.1 for mobile

, and is expected to feature on

Dell's

(DELL) - Get Report

soon-to-be-launched Streak device.

Google shares dipped 85 cents, or 0.17%, $505.47 on Thursday, as the Nasdaq dipped 0.56%.

-- Reported by James Rogers in New York

Follow James Rogers on

Twitter.