Google recently launched its NexusOne (smart) phone. Despite the controversy, not only the phone but the move may be smart. This phone and Google’s development of its Android mobile device (when is a phone not a phone?) operating system have generated lots of coverage – both buzz and noise – in trade and mass media. Commentators have waxed eloquently about the phone itself, the carriers, the competition, and the alleged competitive drama.

It is being described as a battle of titans between Google and Apple along the lines of humans vs. orks, Godzilla vs. Magalon, or the Yankees vs. the Red Sox.

From a marketer’s prospective, this looks a bit different. Thus I doubt that making smart phones or other devices is central to Google’s strategy. Google has a broad portfolio of businesses including location based services (Maps), shared video (YouTube), cloud computing (Google Apps), and many others. However, what pays the bills and accounts for more than ninety percent of Google’s revenue is advertising.

Google’s business success derives from its innovation in search advertising. Those small usually all text ads, which appear in the margins of query results, have been a great business. It is the reward for owning desktop (including laptop) search.

There have been many competitors from those long gone such as Excite and Alta Vista to Microsoft’s new Bing service, but Google dominates the medium and the ad revenue, which accompanies it.

The threat to Google, is that the medium is changing. Increasingly search will happen not from a computer as such but from a small(er) mobile device such as phone. If Google can’t be a major player in mobile, its dominance in online advertising in general will be threatened.

No firm dominates mobile search, so innovative competitors would have a far better chance than in desktop search. Google apparently recognized this by making a number of investments in mobile technologies. By participating throughout the mobile value chain it improves its chances of gaining insights and forging relationships, which can enable it to retain its lead in search advertising even as context and environment for this change.

If Google is going to compete with Apple, it will be by delivering ads through phone apps, not by slugging it out in the low margin handset business. Thus, the Nexus One looks like defensive marketing rather than an attempted iPhone killer.