• by Laurie Sullivan  @lauriesullivan, December 13, 2009

Google has released an experimental mobile phone running Android to employees. Reports suggest the unlocked phone will ship to the public in January.

News of the phone spread across the Internet Saturday after Google vice president of product management Mario Queiroz wrote in a post on the mobile blog that the search engine asked employees to test a product. Allowing employees to test products and services has become a frequent strategy of the Mountain View, Calif. search engine to gain quick feedback and suggestions for improvements.

Google employees began tweeting on Twitter about the phone Friday evening. An unlocked Google branded phone could change the game for mobile commerce and search. After the news broke, "google phone" became the fourth-hottest search term by midday Saturday.

When asked how an unlocked phone from Google could change the landscape for advertising, search and ecommerce, Amielle Lake, CEO of Tagga, a Vancover-based mobile marketing firm that supports clients across North America, says the most important change will be to cut out the carriers. "People will increasingly use chat, twitter and other off-carrier means to communicate," she says. "Voice is already declining sharply, and SMS might even go away. This means that search and display advertisers will have a larger and more captive audience, and if Google applies its algorithms to mobile, better targeting that will include precise location targeting."

Lake says mobile commerce will finally become possible, unlocking new advertising opportunities and many business opportunities. Expect to see more companies release unlocked phones in the future, she says -- adding that these phones will transform the mobile market into something that mirrors the online world, except much bigger.

Didit CEO Kevin Lee suggests that advertising could be used to subsidize the phone. "Customers would pay less for service if they interact with a lot of advertising," he says. Think of the advertising-based services Virgin Mobile offers.

Other advertising services would run the gamut, from sponsored ringtones and sponsored on hold messages, to text messaging and sponsored browser software, Lee says.

Compiled from a variety of sources, HTC will build the Google Phone that will launch in early January. No one carrier will get the contract. Instead, the phone in the United States will run across carriers that support service on the GSM network.

Reports suggest that the Google Phone is thinner than the iPhone. It has a touchscreen with no keyboard, two microphones, a large camera and voice-to-text features. The reports say it will be called Nexus One, manufactured for Google by HTC Corp., and run the Android operating system for mobile.

Aside from real-time search, Google focused on mobile applications and features last week during a press conference in Mountain View, Calif.

At the press conference, Google described a voice to text to audio translation application, a mobile search feature called Near Me Now that helps locate nearby businesses, and Google Goggles, an application that allows people to take a picture with a mobile phone camera and search for more information about the object across the Web.

Google released Google Goggles in Google Labs because of the nascent nature of computer vision, and the scope of the company's ambitions for visual search. Today, people have to frame the object and snap a picture. In the future, it will be as easy as point and shoot.

Advertising and marketing executives have been touting mobile ads for several years, suggesting that each of the past two would become the year of mobile. But the one thing that has been lacking is support from a search engine that could provide the advertising and marketing services to support a growing young market.

Google, Microsoft and Yahoo executives have talked about an increase in support for mobile as more brands add the medium as a line item in online marketing budgets.

A Google spokesperson declined to comment, confirm or provide any additional information other than the post in the mobile blog.