Why the Google Phone is Really About Google Ads

The Google Phone is one year away, but the breathless panting is already here. Sometimes it seems like Google CEO Eric Schmidt can exhale and the online tech world will rhapsodize about what it means for the future of air. As the Atlantic Wire's John Hudson explains, techies might be overreacting to the news that Google is trying to produce its own phone. The most interesting issue to me isn't the specs of the Google Phone but the specs of Google's evolving mobile ad strategy.

It's pretty clear that dominating mobile ad space is Google's top priority in five years. How do I know? Well, because they simply won't stop talking about it. In Schmidt's recent article in the WSJ about how Google could help newspapers, here were the first two sentences:

It's the year 2015. The compact device in my hand delivers me the world, one news story at a time.

This is the exact same 5 year vision Schmidt described at the Atlantic's First Draft of History event: an on-demand world, straight from our pockets. Remember, 97 percent of Google's profits are still from online. For Schmidt, the future of online advertising isn't on our desk. It's in our hands. Google isn't getting into the phone business so much as its getting into the mobile advertising business.

That's why Google bought Ad Mob, a mobile ad display company, and Gizmo5, an online phone company like Skype. Putting together a Google phone is about putting Google ads in front our faces when the calender turns over to Schmidt's 2005 vision. In addition to building on Google' ad space domination, mobile ads could also subsidize Google's phone service, which would make it a real competitor against Verizon and AT&T.