About 200,000 smartphones and other devices based on Google's Android operating system are sold every day, CEO Eric Schmidt said on Wednesday, underscoring the strong challenge to rivals like Apple's iPhone.

The world's No.1 search engine is hunting for new revenue opportunities as growth in its core Internet business slows and as new technologies like smartphones and social networking services transform the way consumers access the Web.

Schmidt expects revenue from search advertising on mobile phones to eventually exceed the revenue Google generates from searches on PCs. But he could not predict when.

It looks like Android is not just phenomenal but an incredibly phenomenal success in its growth rate, Schmidt told reporters on the sidelines of the Techonomy conference in Lake Tahoe, California, where he spoke on a panel earlier.

Schmidt said Google was now focused on integrating social networking features into its online products. But he would not comment on reports it is building a new service to compete with Facebook -- the world's largest social networking site -- and partnering with social gaming firms like Zynga.

Analysts say games could be its ticket to entering the social networking arena, as the Internet giant seeks to overcome a string of lackluster initiatives that have left it on the sidelines of the booming market.

There have been a whole bunch of leaks, some that have been correct, some that have not been correct. In general it's better to not talk about unannounced products, Schmidt said.

In general, we always believe that our products would be better with more social signals.

The comments came the same day the company pulled the plug on Google Wave, a high-profile social networking product unveiled last year. Schmidt said Wave did not get enough traction but that the company would apply some of its features to forthcoming products.

ANDROID ACCELERATING?

Smartphones running the fledgling Android software topped the list among U.S. consumers in the second quarter, industry tracker NPD said Wednesday. The operating system powered a third of all smartphones sold from April to June, with Research in Motion's BlackBerry sliding to second place for the first time since 2007.

BlackBerry lost 9 percentage points of market share, diving to 28 percent. The iPhone came in third with 22 percent.

Android now powers smartphones made by a number of different manufacturers, including a revitalized Motorola's Droid -- the best-selling Android handset in the second quarter among U.S. consumers -- and Taiwan's HTC.

Google said recently that 160,000 Android phones had been activated each day during the second quarter, up from 65,000 in the first quarter.

Schmidt said that Android devices would be coming to market from many more hardware partners.

Turning to China, he hoped the company's situation in the world's largest Internet market by users would remain stable, following Beijing's's recent one-year renewal of the company's Internet license.

This year, the Internet giant embarked on a high-profile dispute with Beijing over Internet censorship, threatening to pull out at one point. Schmidt stressed that the authorities could shut their site down anytime.

Speaking about an incident last week in which a Google web site initially reported that its search service in mainland China was for the first time fully blocked, Schmidt said the technical details of what happened were still unclear. [ID:nLDE66T06Y]

It's possible we screwed up, it's possible the government screwed up, it's possible it was a competitor, he said.

Asked whether the incident might have been the result of some malicious action, Schmidt replied: My guess is it's not.

(Editing by Edwin Chan, Bernard Orr)

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