The phone will be using Google's Android operating system software and manufactured by HTC. One major marketing factor offered in this new technology is the availability for designers to make applications. Google expects to develop their own set of applications, but have opened the door to thousands of app designers. The phone is said to be of a touch screen like the iPhone, but with a slide-out full keyboard as well.
The internet friendly phone is a great strategy for the company. They can profit from the sale of this device on a number of levels. First of all, the sale of the phone itself, which will most likely be the least profitable aspect of the entire venture, should bring in extraordinary gains (if the phone is designed well and the software runs smoothly). As T-Mobile will be the first to sell the phone, and with Sprint said to be designing a Google based phone as well, Google already has two major carriers under its belt with obviously large market shares.
Second, the mobile marketing possibility offers a fair amount of growing room for both Google and the mobile marketing industry which as I've previously written seems to be in need of serious attention. Once the population of consumers who have the capability of being marketed to grows, I'm sure that segment will as well.
Finally, I see the current ad network Google already maintains as growing significantly with the ability to browse from the new generation of cell phones. Their software should be best complimented by their browser which is currently in beta form, and which I can only assume will be made into a web app as well. Using this software Google can lead more consumers to continuous access throughout the day on their network. Once factoring in issues of screen real estate, ads on the new phones will be highly profitable for all companies involved.
FYI...Android is free and open-source, developed by The Open Handset Alliance (a group of about 30 companies).http://www.openhandsetalliance.com/android_faq.html
Google or any of the other firms involved won't be making a dime off the OS. Think of it as Linux (literally) for your hand-held. Anyone can download the OS and make their own mobile device if they desired.