After it was widely-rumored that Google is planning a GPhone, now the New York Times has decided to take a closer look at the search giant’s plan.

As you might already know, in August the tech site Engadget reported that Google is working on a mobile device platform that will power Google’s branded phone. Engadget said that Google began to develop the "GPhone OS" after the very quiet 2005 acquisition of mobile software company Android, started by Danger cofounder and former-prez / CEO Andy Rubin.

At Google, Rubin's team has developed a Linux-based mobile device OS which they're currently shopping around to handset makers and carriers on the premise of providing a flexible, customizable system, Engadget wrote.

The New York Times article is based on similar information. An industry executive familiar with the project told the New York Times that for more than two years, a large group of engineers at Google has been working in secret on a mobile phone project, but it seems that at the core of Google’s phone efforts is the operating system for mobile phones that will be based on open-source Linux software.

Google OS will be optimized to work with Google’s mobile versions of various applications, like GTalk or Gmail, and, according to the New York Times, Google is even considering a mobile browser.

Also, in the Times’ opinion, the Google Phone will not be a competitor for iPhone, as Google has different goals.

The Google OS or Google Phone will help Google to make the first steps in the mobile Internet market.

“Google wants to extend its dominance of online advertising to the mobile Internet, a small market today, but one that is expected to grow rapidly. It hopes to persuade wireless carriers and mobile phone makers to offer phones based on its software, according to people briefed on the project. The cost of those phones may be partly subsidized by advertising that appears on their screens,” wrote the New York Times.

In the past years, Eric Schmidt repeatedly said during various interviews that in his opinion the mobile phones should be offered for free in exchange of users’ willingness to watch ads.
The first rumors about a Google phone emerged last year in December, when it was reported that Google seems to be interested in developing a “branded Google phone”. Allegedly Google has held talks with Orange about a multi-billion-dollar partnership to create a 'Google phone' which makes it easy to search the web.

Wall Street Journal claimed to have some new information about the long-rumored Google project.

Quoting sources familiar with the project, Wall Street Journal said Google already invested hundreds of millions in the project and talked over tech specs with phone manufacturers. Also, the report says the Web search giant developed prototype handsets and has talked with at least to two mobile carriers, T-Mobile USA and Verizon Wireless.

What is interesting is that both the New York Times and Wall Street Journal said that the phone is expected until this year end.

Last month Google announced the launch of AdSense for Mobile service, although the company has been in fact running mobile ads since mid-2006, through its auction-based AdWords program.

Through this new move, the AdWords ads will be automatically converted to text ads that will allow the marketers to place their contextual ads also on web sites that are viewed via the mobile phones.

AdSense for Mobile will work in a similar way as it does on PCs: the publishers will be allowed to place AdSense contextual advertising on the web sites designed for the mobile phones, so that the traffic could be monetized. The ads would contain only two lines of text, with 12 or 18 characters per line, depending on each language’s characteristics. Publishers earn money whenever mobile users click on the ads.

Google’s new AdSense for Mobile program will require web site use Wireless Markup Language (WML), Extensible Hypertext Markup Language (XHTML) or Compact HTML (CHTML) for enabling Google’s Internet users to place relevant ads on the web sites.

Google is already offering mobile versions of Picasa Web Albums, Google Calendar,  Google Search and Gmail. And with AdSense for Mobile it seems like all the pieces of the puzzle are coming together.

Still it remains to be seen what are the Google’s real intentions and the rumors will prove to be true how the consumers will react to a Google-powered phone.