Google Says Employees Are Testing Android Phone

Google Inc. (GOOG), seeking to push further into the market for mobile phones and advertising, said employees are testing a device that uses its Android operating system.

The phone is based on hardware manufactured by a partner and it will allow the company to experiment with new features, Google said yesterday in a blog post. Employees worldwide are testing the device, the company said.

Separately, The Wall Street Journal reported that Google will sell the device directly to consumers next year.

Google, owner of the most-popular Internet search engine, is expanding its products for mobile phones as demand increases for devices that can surf the Web, take pictures and play music. Google's Android software was first offered on phones last year, and Verizon Wireless (VZ) released a device called Droid in November that uses the program.

Offering its own device would put Google into direct competition with Apple Inc. (AAPL), maker of the iPhone, and Research In Motion Ltd.'s (RIMM) BlackBerry. It would also create new rivalries with manufacturers such as Motorola Inc. (MOT), which already make Android devices.

Google said its employees are "dogfooding" its new device, a term that refers to companies using their own products, or "eating your own dog food."

Google and T-Mobile USA Inc. introduced the first Android phone in September 2008, a bid to lure consumers away from the iPhone and BlackBerry. The Journal, citing people familiar with the matter, said the new phone will be called Nexus One and is being made by HTC Corp. (HTCCF:US)

Katie Watson, a spokeswoman for Mountain View, California-based Google, declined to comment beyond the company's blog posting.

Google fell 99 cents to $590.51 in Nasdaq Stock Market trading on Dec. 11. The shares have almost doubled this year.

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