Google has finally ended the months of speculation by confirming that it is entering the mobile phone market in a move to extend the reach of its advertising network. Not surprisingly, the announcement has attracted extensive press coverage, such as this report by the Washington Post.

Google will not be developing a phone, but is to partner with mobile phone networks, makers and software developers to create a new system for mobile phones that will make it easier for users to surf the Internet on their phones and to enable most mobile phones to work more like computers. By simplifying the process - and lowering the cost of entry - Google intends that a bigger mobile phone audience will generate more advertising spend from online access.

Google's new technology is being called 'Android' and they are working with a network of around 35 companies, including T-Mobile and Motorola, to design the system which is expected to be available to software developers within the next week. Mobile phone users are expected to have access to the specially equipped phones in the second half of 2008. The final agreements on usage still need to be agreed with the software partners but most are likely to revolve around revenue-sharing arrangements as Google aims to create a system in which the mobile service is subsidised through adverts, similar to the way many web services are now offered.

The Washington Post article says that this announcement could signal enormous change for the wireless industry and may have regulatory implications for Google. It also marks a strategic shift for mobile carriers like Sprint and T-Mobile, who are trying to keep pace with larger rivals as wireless consumers demand increasingly sophisticated services. The Google-powered software would also allow thousands of companies to develop new services, such as social-networking sites and mobile video portals, without needing permission from carriers.

No doubt there will be much more about this development over the coming months.