Calling All iPhones! Calling All GPhones?

Google Inc. is in a position to develop its own mobile cellphone and incorporate wireless Internet into the device with hopes of competing with Apple's iPhone. Code-name gPhone by the Tech community, Google is not in facet creating a telephone with a google like operating system. Instead they are hoping to persuade wireless communication companies and cellular telephone makers to use their own software in the phone. Their plan is to have Google offset the advertising costs of manufacturers to make the devices more attractive to companies so that they will jump on board.

Byron Acohido of the USA Today writes, "Google`s widely anticipated (not to mention top secret) GPhone mobile phone project could trump Apple`s glitzy iPhone by going low cost and low tech." Google recently acquired Finnish company Jaiku who holds a multitude of Short Message Service patents (SMS), which is the technology that enables the exchanging of short messages between cell phones.

Google currently holds a 29% share of the US Market over 16% to Yahoo according to internet marketing research firm eMarketer, and would like nothing more than to control the mobile device market such as cell phones, blackberry's and more, including their own GPhone. Their market share recently skyrocketed when Yahoo! announced it will be listing ads with Google on their sites. On this news Google's stock rose to a whopping $600 per share, speculating that Google's profits may climb to as high as 50% over last year's numbers.

Acohido reports that, "Richard Doherty, research director at The Envisioneering Group, claims Google is driving toward getting device makers to produce basic handsets equipped with a "Gbutton" that takes users right to a Google texting screen." According to Doherty, "Their goal is to get GPhone texters in the habit of querying its vast databases for directions, phone numbers, movie times or restaurant tips and woo advertisers to sponsor GPhone-delivered answers." Apparently the hush-hush top secret project by Google (said tongue in cheek of course), is already in a phase where a model is being designed with rumors abound that includes a Google browser and access to Gmail and YouTube (both of which are Google operated, and both of which are already accessible on the iPhone by Apple).

The first question that all consumers will ask of course, is about the cost. The iPhone was introduced at a price of around $600, only to be dropped $200 dollars in price after the initial hype wore off. Google insiders claimed that the GPhone will be offered at a fraction of the cost of the iPhone, Blackberry and Palm Trio, but this is becoming more and more difficult for Google especially because of Apple's recent announcement of the iPhone 3G and the new price tag of $199 per phone. Google will use its power of advertising to reduce the price of their gPhone, but one drawback according to Acohido is that, "cell phone carriers want a cut of the advertising revenue". A cut that many say Google isn't ready to give.

Although nothing has been released as far as an agreement between Google and a cellular provider, manufacturers are said to have devices ready to go and according to Acohido, "could be ready to be on the shelves in a matter of weeks." The Gphone will be aimed toward a younger consumer. For those teens around the neighborhood, chances are this may be the next hot item on it's way just it time for the summer craze and the holiday season to roll in.

*And don't forget, you can subscribe to Squawk through our RSS feed or with the Email Subscription Service.