Google spending hundreds of millions on mobile: report

NEW YORK (Reuters) - Google Inc has invested hundreds of millions of dollars in its cell phone project and is courting U.S. and European mobile operators, The Wall Street Journal reported on Thursday.

A Google search page is seen through the spectacles of a computer user in Leicester, central England July 20, 2007. Google Inc. <GOOG.O> has approached wireless phone operators and handset makers as it looks for a piece of the market for advertisements on cellphones, the Wall Street Journal said on its Web site on Thursday. REUTERS/Darren Staples

Anian, a Reuters company that tracks industry trends for institutional investors, reported last month that Google had engaged Taiwan’s High Tech Computer Corp to design a Linux software-based phone for launch in the first quarter of 2008.

The Anian report cited industry sources as saying T-Mobile, owned by Deutsche Telekom, would likely be Google’s U.S. partner with France Telecom’s Orange selling the phones in other markets.

The Journal said on Thursday Google had also approached the two biggest U.S. wireless services, AT&T Inc and Verizon Wireless, in recent months to ask them to sell phones with Google service.

It cited a Verizon Wireless executive saying the company had decided not to integrate Google’s Web search tightly into its phones because of Google’s advertising revenue-sharing demands. The newspaper said the executive had not commented on a Google phone.

A person familiar with the situation told Reuters that talks between Verizon Wireless, owned by Verizon Communications Inc and Vodafone Group Plc, and Google have ended without resulting in an agreement.

Representatives for Verizon Wireless, T-Mobile and AT&T declined to comment.

T-Mobile and Vodafone already incorporate Google search in their mobile Web service in Europe, while AT&T offers it as one of several Web search options.

“We talk to a lot of different companies and we’re not going to comment on our discussions with any of them,” said Mark Siegel, an AT&T spokesman.

Google said in an e-mailed response that it is “partnering with carriers, manufacturers, and content providers around the world,” without giving further details.

It has said wireless was an increasingly important market but it has not announced plans to build a phone. It said last week that Sprint Nextel Corp would feature Google services on devices for a new wireless network the No. 3 U.S. mobile service is building.

Google has also developed prototype phones and talked over technical specifications with manufacturers including LG Electronics, The Wall Street Journal said.

Mobile advertising is still a relatively small market but advertisers and wireless experts expect this to change.

Yankee Group has forecast the mobile ad market will more than quadruple to $275 million in 2007 and eventually grow to $2.2 billion in 2010, up from an estimated $60 million in 2006. Some experts are forecasting an even bigger market.

Reporting by Sinead Carew and Paritosh Bansal in New York and Nicola Leske in Munich