LAS VEGAS — Google executive Andy Rubin attended the Consumer Electronics Show last year, but he certainly wasn’t talking to the press then as the Android mobile operating system he created was still in stealth mode. Fortune sat down with the longtime wireless innovator in his Four Seasons Hotel suite Tuesday to chat about CES, Android and the wireless industry.

So what are you doing here at CES?

It’s a great place to have everybody in one place and have very efficient meetings. When we had our booth in 2006 we realized that the audience for CES is mostly buyers of consumer electronics, and that’s not the type of company that we are. But still it’s a great place to meet people in the industry. That’s what we’re here to do.

Do you plan to have a bigger, more public presence at upcoming wireless shows like CTIA and Mobile World Congress?

Our public presence is on the Web. When you go to Google.com you get Google (GOOG). We don’t need to market ourselves in the traditional way. You have consumer electronics companies competing for the press’ attention or competing for consumers’ attention. We’re fortunate that we don’t have to do that. But we do look for partnership opportunities at these kind of trade shows.

I know phonemaker HTC has said they would bring out the first Android-running phones in mid-2008. But where does Android’s software development kit stand now?

Well I’m not sure if we said they would be first, but second half of 2008 is what we’re targeting for phones. On November 5th we announced what we’re doing and on November 12th we announced the availability of the SDK. The purpose of that was to actually bring developers up to speed while our platform was still in development. We chose kind of a more open way to do this — we call it innovating in the open. So as we develop the SDK and the platform we’re constantly making releases — probably every two to three weeks we make an SDK release. The purpose of that is to try things out with the developers and get their feedback. If they don’t like it they can tell us and we’ll fix it. And hopefully in the end we’ll have a better product because of that.

I heard some developers were complaining that the SDK was buggy? Is that something that Google is fixing?

The complaint I read in the press was not that it’s buggy — they understood that it’s buggy because it’s an early release — but that there was no mechanism to report bugs. Normally what you would have is a publicly accessible database where developers could submit bugs. We weren’t ready with that, but the intention is to supply that and we stepped up those efforts when it became a priority to the press. In a couple of weeks we’ll have an online mechanism. We thought it was more important to get the SDK out there in developers hands first.

Why did Google feel the need to develop a mobile operating system?

There are a couple of reasons — there’s the more community-oriented one and the self-serving reason. It has become easier to build PCs and cell phones, but the part that is a big deal and that is becoming more expensive and complex is the software. If you plot hardware going down and software going up and becoming more complex, it’s kind of unnatural for the manufacturers to be software companies – that’s not what they are. They have to introduce a series of new cell phones every six months and users are demanding new features constantly.

Software takes a lot of time to develop, and the software cost of a cell phone is about 20 percent. That is impacting consumers and making cell phones more expensive. The trickle-down effect is that it’s actually making data plans more expensive. By building a complete stack and having it be more open where there’s not a single vendor that’s selling it – we’re actually giving it away for free – we feel that it opens up the market in a way that benefits the consumers. It will make cell phones and data plans cheaper. And on the Google self-interest side, we want to make sure consumers have the ability to access mobile services. The way we make money is advertising.

What do you say to the argument that adding another operating system only adds to the fragmentation in the industry?

I’ll say something very strong – they probably don’t understand the economics of how standards are created. If we’re worried about not fragmenting and not creating anything new then we’d still be using tubes in our radios and you’d have to warm up the TV. That argument makes no sense to me. The important thing is not to confuse developers and that’s why we chose the Java programming language. From a developer’s perspective they don’t have to learn anything new.

Was it hard keeping Android a secret over the past few years?

Well, even as a startup we were in stealth mode. There was actually not much of a mental shift when we joined in that respect. When we were doing Android, we just said we’re building software for cell phones. We didn’t go into the details of an operating system.

Android aside, what excites you most in the wireless industry?

I think there’s a lot of opportunity that hasn’t been tapped yet. I think location [GPS-based services] is completely untapped. We’re just at the cusp of having innovative applications built in on top of that. I also think that we haven’t tapped media on the cell phone yet, like sharing things and mobile social networks. Mobile is such a big market compared to the PC — you carry your phone with you eight to 10 hours a day.