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Is Google Going To Break Into The Mobile Phone Hardware Business?

Dan Jones over at Unstrung is reporting that Google has 100 people working on a new mobile phone. The effort, spearheaded by ex-Danger founder Andy Rubin, would be Google's first foray into the mobile hardware space.

If the rumors are true, such a step would be a big one for the Internet giant. In an interview with Polaris Venture Partners general partner Simeon Simeonov, Unstrung reports that Google already has considerable mobile assets under its roof with the 2005 purchases of Android and ReqWireless. Simeonov claims that an inside source told him the device would be similar in form to RIM's BlackBerry, would run either Java or Linux and could potentially support services such as VoIP.

While a handful of analysts have confirmed hearing similar rumors, there is disagreement on whether the move would be a good one for Google. Some, like Ovum's Roger Entner, believe a mobile phone would be a good way for Google to continue to drive and build its advertising business. Gartner analyst Ken Dulaney doesn't feel the same way, and thinks entering the wireless market is very difficult to do and Google should do its due diligence first.

Though Google already has solid relationships with both wireless network operators and handset manufacturers alike, creating its own hardware is a much bigger risk than it has taken in the past. To-date, most of its software is ad-supported and free to users. Would it offer any potential device for free as long as users view certain ads before performing various functions? I doubt it.

I think it's particularly interesting, though, that Google would choose a wireless device as its first piece of hardware. That shows where Google believes a solid portion of its future revenues are to be made.

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