ANALYSIS - Google phone strategy takes off, challenges ahead

By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Google Inc has won a seat at the smartphone table.

Two years after the Web search leader announced its plan to barge into the market, a dozen phones are using Google's Android mobile operating software, including Motorola Inc's heavily promoted Droid phone.

And software developers have created more than 12,000 games and other applications that run on Android phones, second only to the 100,000 apps on Apple Inc's iPhone.

"This is a platform that a lot of people were very sceptical about and it's just exploded," Brigantine Advisors analyst Colin Gillis said about Google's Android.

But Google's success getting handset makers and wireless carriers to adopt its free smartphone software has not yet translated into a material benefit to finances.

Unlike Nokia or Research in Motion, which make money from hardware sales, Google is looking to prominently place its software and services on a new breed of mobile devices and gain direct access to valuable consumer data that can be used to sell ads for premium prices.

This month, Google announced the $750 million acquisition of AdMob, whose technology and network allow ads to be placed on mobile websites and within iPhone and Android apps.

Google, which recorded about $22 billion in revenue in 2008, doesn't break out its mobile ad sales or disclose how its rates for mobile ads compare to traditional online ads.