Because Google isn’t developing a cellphone, it’s developing a cellphone operating system. With it, the company hopes to replicate its online success in the mobile world and give Microsoft’s Windows Mobile OS a run for its money as part of the deal. “The essential point is that Google’s strategy is to lead the creation of an open-source competitor to Windows Mobile,” one industry executive told the New York Times. “They will put it in the open-source world and take the economics out of the Windows Mobile business.”

And that makes quite a bit more sense than the idea of Google suddenly leaping into the hardware business with a full-blown Google handset. Better to extend your services and advertising to the roughly two billion consumers world-wide who use mobile devices than try and sell them an entirely new mobile device, right?