It really doesn't matter whether or not Google introduces a phone; its applications are already installed on the iPhone, which will be readily leveraged by marketers and advertisers.

Google phone?

YouTube, which has struggled for a long-term viable advertising model to justify the steep price that Google paid for it, has found a strong distribution partner after being hardwired into the iPhone. Eric Schmidt, Google’s CEO, has gone on record citing the iPhone as a powerful device for current and future Google apps.

What this means for marketers and advertisers
Google Street View, at once intriguing and frightening, will become ubiquitous among the iPhone set. Advertisers -- who are struggling with the decline of internet banner engagement -- know that the future lies with intelligently ensconcing their brands and services within content, widgets and other applications. We will all be closely watching how iPhone users customize their content and applications in order to shape our future marketing and advertising.

Google certainly has the capital to create a branded phone, and searches on the internet evince rumors of mysterious European skunkworks focused on such an enterprise. However, as a dominant internet and application force, do they want to enter the hardware arena against Apple, the reigning king of the form factor? Either way, Google will be a major benefactor of the iPhone’s success.