Google is putting the final touches on a mobile-phone project, but unlike Apple's iPhone the so-called GPhone is all about software for mobile carriers and mobile advertisers.

Google's goal is to extend its dominance in online advertising to the emerging mobile advertising market, which is small today but expected to grow dramatically in the years ahead, according to a news report in the International Herald Tribune.

The report says Google is expected to unveil details later this year, and handsets with the software could appear in 2008. But about 30 prototype phones are reported to be "in the wild" as Network World Microsoft Subnet blogger Alex Lewis discovered firsthand last week.

Apple's iPhone revolutionised user expectations about how mobile handsets should look, feel and behave. The iPhone's success has sent manufacturers scrambling to not merely match but surpass its features.

But Google's GPhone is an open-source phone operating system. There has been a growing interest and sophistication in Linux-based software and development tools for mobile devices.

The Herald Tribune article, citing both unnamed "industry source familiar with the project" and industry executives, outlines two possible directions for Google's ambition. One is to develop and deploy a vastly cheaper alternative to Microsoft's Windows Mobile operating system. The second is to loosen the grip that carriers have on the software, devices and services that can run on their closed cellular nets.

As the report makes clear, either direction - or even both together - create powerful rivals for the online search-engine giant.

"Companies like Verizon Wireless and AT&T have spent billions of dollars upgrading their networks, establishing relationships with customers, subsidising phones and creating their own mobile Internet portals," the Herald Tribune reports. "Now they want to make sure those investments pay off, in part, through mobile advertising, and they see Google and other search engines as competitors."

Instead, those carriers are turning to new companies, such as JumpTap and Medio Systems, whose products can be relabeled as the carrier's own brand.

The GPhone project has ignited intense speculation on the web. A search on Google's own website turns up over 2.7m references to the GPhone. One of them is a Wikipedia entry, which sifts an array of news accounts for details and clues.

Google seems to be banking on the growing popularity and appeal of a Linux-based mobile platform. The Linux Phone Standards (LiPS) Forum released its first specification last June. More sophisticated, full-blown mobile Linux operating systems are emerging from new companies, such as a la Mobile. Big handset makers, such as Motorola, are betting heavily on Linux for the future.

But the mobile Linux market remains fragmented, and that may give Google the opening it needs to leverage its name-recognition and search-engine expertise in a new, still-forming market.