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The New York Times sheds new light on Google’s possible moves in the mobile world. The latest is that Google will likely release an operating system and a number of mobile apps, rather than its own phone.

In other words, beyond the prototypes it develops to demonstrate its mobile software to carriers and manufacturers, its innovations will reside in software, not hardware. This makes sense and stays true to the company’s DNA.

More importantly, this makes Google’s moves into mobile more competitive with Microsoft than Apple (iPhone), as previously speculated.

From The New York Times:

In short, Google is not creating a gadget to rival the iPhone, but rather creating software that will be an alternative to Windows Mobile from Microsoft and other operating systems, which are built into phones sold by many manufacturers. And unlike Microsoft, Google is not expected to charge phone makers a licensing fee for the software.

“The essential point is that Google’s strategy is to lead the creation of an open-source competitor to Windows Mobile,” said one industry executive, who did not want his name used because his company has had contacts with Google. “They will put it in the open-source world and take the economics out of the Windows Mobile business.”

Microsoft currently has distribution deals with 48 handset makers and 160 worldwide carriers for its Windows Mobile OS, with an installed base of about 12 million phones (10 percent of total smartphone market).

But one of Google’s challenges will be to gain carrier support, given the technical specs of its software that will allow mobile users more freedom and ability to open up the capabilities of their mobile devices in ways that sidestep carrier core products.

VoIP capabilities in range of Wi-Fi networks, for example, lessen the need and dependence on carrier-delivered voice minutes (explored in past post). Carriers, however, could fold to competitive pressure to offer Google software on their devices.

The software specifically will include a Linux-based mobile operating system and a number of Google applications such as a mobile search browser, Gmail and Google Maps. Most important will be Google’s ability to target mobile local searchers through some sort of AdWords integration.

It could also develop a mobile version of its AdSense publisher network in which ad revenues are shared with application developers of the open source operating system (TechCrunch explores this hypothesis). Things could very well move in this direction, and we’ll keep watching intently.

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