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Analysis: Google's Android mobile strategy explained

Google's mobile move: awe-inspiring and terrifying

Apple, which has been traditionally a Google ally, is likely not enthused about Android, which could make it easier for competitors to match, or at least approach, the iPhone's innovations.

Ultimately, what is propelling Google in this effort is its core advertising business, which the company recognizes it must extend to the mobile market.

A small market today, mobile advertising is expected to attain a significant size in coming years. According to Opus Research, mobile advertising spending in North America and Western Europe will reach a combined $5.08bn by 2012, up from an estimated $106.8m at the end of this year. This represents a compound annual growth rate of 116 percent.

Opus Research, which released the forecast last week, said that improving the mobile user experience will prompt more people to spend more time using the internet via their mobile phones. This in turn will fuel ad revenue growth.

In the end, independently of what ends up happening, Google's entry into the mobile market is a welcome development, Dulaney said.

"We need powerful players from the 'wired' internet market to get into the mobile space to break up the tight control carriers have had on content," Dulaney said. "So far, carriers have controlled all the content and they've been bad at it. Innovation has been stifled."


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