The oft-rumored, pratically fabled Google Mobile Phone isn't what many thought it would be. The rumors were all over the map, so much so I avoided writing about it because it was difficult to ascertain even a tiny clue about what was going on.

Well, now we know. Google isn't making the hardware. They're making the software. They're going to compete directly with Windows Mobile, on very much the same business model: make the OS and let hardware people make the phones. The only difference is that, much like their internet offerings, the OS will be free, likely subsidized by ads:

“The essential point is that Google’s strategy is to lead the creation of an open-source competitor to Windows Mobile,” said one industry executive, who did not want his name used because his company has had contacts with Google. “They will put it in the open-source world and take the economics out of the Windows Mobile business.”

Some believe another major goal of the phone project is to loosen the control of carriers over the software and services that are available on their networks.

Read: For Google, Advertising and Phones Go Together - New York Times

Analysis after the break, go getchyer panic and then getchyer happy thoughts: click the "read more" link.

Initial Panic

Right now everything feels quiet, like a calm before the storm, like sitting in a foxhole on a foggy morning, like sitting in a jeep on a lost island and watching a cup of water ripple - the T-Rex is coming.

Microsoft has been viewing Google as their main competition for a long time now. If that feeling wasn't cemented before, it is now.

I really hope that this doesn't mean I won't be able to use GrandCentral someday.

Why It's Good for Windows Mobile Users

Now, the bright side for Windows Mobile lovers - there are a lot of bright sides.

Writing a Smartphone operating system is hard. So hard that, at least up to this point, Apple has taken a flyer on it and developed a closed-system that doesn't offer an SDK (we got your SDK right here), or cut and paste. It's a supercharged-feature-phone, but not (yet) a smartphone. Heck, Palm has been saying they're developing something nearly identical to what Google is talking about for years now and they're still 12-18 months away from releasing anything. The point is that will take a long time before Google's featureset will be comparable to Windows Mobile.

Competition is good, despite what people are fond of saying about Microsoft's embrace and extend philosophy. In fact, there's so much growth potential in the smartphone space, anything that grows the market will grow it for everybody (at least for now). The rising tide raises all ships metaphor still applies.

Free (with ads) sounds scary. But I, and I think a lot of other people, will pay a little more for keeping our precious smartphone screen real-estate ad free, thanks.

I really and truly do hope that Google achieves their goal "to loosen the control of carriers." That helps everybody. Carriers are evil, really really evil . Google's motto is "don't be evil." Carriers could learn from that.

Bottom line: It's still the software, stupid, which I wrote in response to a round of Google rumblings back in July:

And I have a lot of faith in the Windows Mobile team and the Windows Mobile developer community when it comes to function. Which brings us back around again, to Google. Google presents an interesting challenge (yes, Billy G, a "challenge") to Microsoft: Can you take the simple, intuitive, and direct spirit of the original Google homepage and apply it to a smartphone? Can you continue to increase the power while also making it more intuitive to use?