I was just reading an article over on the Washington Post that asks the question, “Why would Google want a phone?” The piece almost makes it seem like it is a mistake for Google to move into the already crowded mobile phone industry.
Commentaries have been mostly about rumors, and they lack a good motive for such a move. Google makes software, not hardware, and rumors that it was developing a PC a few years back turned out to be wrong–it was simply making software for PCs.
I decided to answer the question here and to make a long story short, Google wants a phone simply because it allows them to move from being the middle-man in the content delivery system to just being the man.
When you think about it, Google supplies the content in the case of YouTube for millions of people watching videos and provides the mechanism, Google’s index, to find almost all other content. They are the the gate keeper between the content you want and the device that you get it on. If Google builds the content delivery system and makes it cheap, well, that is the Golden Goose.