Video review of a prototype Google-powered phone

Google has fired the starting gun in a frantic race among mobile handset makers to produce what will undoubtedly be the most important phone released this year: namely, one on which the internet works.

The emergence of the first prototypes running the search giant’s new operating system for mobiles - which vastly improves the experience of using the web on a phone - has effectively laid down the challenge for the likes of Motorola and Samsung as they race to line up phones that will take advantage of it.

Today in Barcelona, crowds gathered around stands showing off at least three different prototypes of the “Google phone”, as handset makers scrambled to sign up suppliers who have spent the last three months - since Google first gave details of the system - building components that run on it.

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Mobile industry experts said that the first manufacturer to produce a so-called "Gphone" would have a significant early mover advantage, because of the growing desire among consumers to have a better experience of using the internet while on the move, and the reality that more and more mobile services - such as music and video downloads – will be web-based.

Among the companies most likely to produce the first such phone are Motorola, which has been losing market share to Nokia and desperately needs a lift, HTC, the Taiwan-based manufacturer, and Samsung. All three companies are members of the Open Handset Alliance, the mobile industry group which has pledged to support Google’s platform.

Nokia, the leading handset maker, with a 40 per cent share of the market, has so far not thrown its weight behind the platform, called Android. Neither has Apple, which has taken more than 20 per cent share of the market for smartphones in the US since releasing the iPhone last June.

Google itself, meanwhile, has not ruled out releasing its own Google-branded phone.

"I expect you’re ultimately going to see many devices, but one manufacturer will make it first, and they will have a significant advantage because of the strong association with the Google name,” Kazuyoshi Kuwahara, a semi-conductor engineer at NEC corporation, which has made a chip that runs Android, said. "It’s a very attractive proposition for a manufacturer to be bringing out the first Android phone.”

David Steel, vice president of marketing at Samsung, said that Android had “significant potential”, but added that it was “far too early to jump out and start talking about marketing.”

At stake is a share of the rapidly growing mobile advertising market – which will be worth $1 billion this year, according to one analyst estimate.

Yesterday Arun Sarin, the chief executive of Vodafone, said that operators needed to “raise their game” dramatically if they wanted to avoid being left behind by the likes of Google in the burgeoning market for web-based services on mobiles.

Google, which makes the bulk of its money selling online advertising, already has revenue-sharing deals with operators and handset manufacturers which offer its products – including search, maps and e-mail – on their phones.

"Google obviously stands to benefit from a more web-friendly operating system for phones, because they want to take the model they’ve developed (for the fixed internet) and perpetuate it in the mobile environment," Andrew Gilbert, the European president of Qualcomm, one of the world’s largest provider of wireless chips for mobiles, said.

According to research by Google, people who own an iPhone – widely regarded as having one of the best web browsers of any phone – are 50 times more likely to access the internet on their phone than those who own other devices.

“The phantom walking the corridors here is definitely Steve Jobs [Apple’s chief executive],” said Vic Gundotra, a vice president of engineering at Google who heads up the company’s mobile strategy. “As the bar is raised for mobile web browsers, more people will be using the internet on their phones, and that will be good for everybody.”

The first handsets powered by Google’s new operating system are expected to go on sale in the second half of the year.

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