Google likes software, particularly the kind that puts ads on Web pages, making Google rich.The realities of a phone business--running a supply chain, keeping inventory and managing distribution--were never something Google wanted from its phone initiative. But it has built about five prototype phones based on the Open Handset Alliance software kit that it has used to demonstrate what an open-source phone could do--and to woo companies to join its team.
The phone, code-named "Dream" inside Google (nasdaq: GOOG - news - people ), looks somewhat like Apple's (nasdaq: AAPL - news - people ) iPhone: It is thin, about 3 inches wide and 5 inches long, and features a touch-sensitive, rectangular screen. Unlike the iPhone, the screen is also time-sensitive: Hold down your finger longer, and the area you're controlling expands. The bottom end of the handset, near the navigational controls, is slightly beveled so it nestles in the palm. The screen also swivels to one side, revealing a full keyboard beneath. (The screen display changes from a vertical portrait mode to a horizontal display when someone uses the keyboard.)
The Dream design makes the core functions--e-mail, text documents and YouTube--readily available by putting icons that open those applications along the top of the screen. In its guts, the phone runs a virtual machine so that applications, like the browser, can launch once during a session, then reside in the background. That way, if someone sends you, say, a YouTube video link, you can run it immediately, without restarting the browser. The browser also downloads large files in stages to cut the time it seems to take to bring them onto the phone.
Taiwan's HTC is already considering manufacturing a commercial version of Dream, which Chief Executive Peter Chou says could be available as early as the second half of 2008. "We've been working on [Open Handset Alliance] designs for almost two years," he says. "This is the best one we've seen." ( See list of the alliance members.)
He would not comment on price or which service provider would offer the phone. T-Mobile, however, is scheduled to play a large role at Monday's announcement.
Other phone designs, said Chou, might include "sizes from small to large, personal models and phones for business productivity. This is about extending the portfolio to make it a better consumer experience--one size does not fit all."
"There are twice as many phones as there are Internet users in the world," says Google's Andy Rubin, who led the Open Handset Alliance initiative. "This platform is a means of correcting this." An added benefit, he suggests, is that the software can be used in any other type of mobile device, such as wireless-enabled cars.
Google "wants to deliver the best platform they can to get click-throughs" on the Internet, says Sanjay Jha, Qualcomm's (nasdaq: QCOM - news - people ) chief operating officer and head of its chip-set division. For its part, Qualcomm is turning over to the open-source community "some low-level device drivers" that will allow Google's Linux platform to work with Qualcomm's air interface chips.
Once the Open Handset Alliance software kit is made openly available--probably sometime in the second half of 2008 when the first OHA-based handset ships--Google will become a hub for future OHA phone developments, including changes to the operating system or browser, or even the applications people are building for the phone.
"Google is committed to keeping it updated--they will continue to invest resources," Jha says. "The problem with open source for phones has been who is behind it. Microsoft backs development of Windows Mobile. Nokia backs their phone. Suddenly, someone is backing open-source mobile Linux with a big checkbook."
That hardly means the end for service providers, however, says Qualcomm's Jha. "We'll work with carriers and developers too, write code for our chips. Every carrier will still have their own needs."