Google Barges Into Phone Market with G1 and Open-Source Android Software

The smartphone, built by Taiwan's HTC and introduced by Google and T-Mobile executives in New York, will be available in the U.S. on Oct. 22 for $179 with a two-year contract -- $20 below iPhone's cheapest model. It could rival Apple's iPhone and further expand the capabilities of mobile Internet browsing and advertising worldwide.

The phone will be sold in T-Mobile stores only in U.S. cities where the company has rolled out its faster, third-generation wireless data network. By launch, that will be 21 cities, including New York, Los Angeles, Houston and Miami.

At its launch, the G1 is not expected to generate massive buzz like the past two iPhone offerings, but its open source software could have a more significant long-term impact on phone usage than Apple, which keeps a firm grip on the iPhone's hardware and software.

"Anyone expecting the soon-to-be-launched Google phone to change the market like Apple's iPhone has over the past year will likely be disappointed -- for now," Yinka Adegoke wrote in a news analysis for Reuters.

Google will allow developers to use its Android software to tinker with the system and create better mobile programs and services.

"Android promises to be the most open platform for building mobile phone applications that we've seen to date because it's based on very familiar tools and technologies," Jason Devitt, co-founder of Skydeck, a new service that will allow users to manage their cell phones over the Web, told Reuters.

Google's entrance into the phone market could also help give a boost to localized mobile advertising, which is still in its earliest stages.

Larry Page, one of Google's founders, said Tuesday that the mobile phone industry, which sells one billion units a year worldwide, was a tremendous opportunity for the company to expand the way people to interact with the company's advertising network.

"Google is extremely dominant when it comes to Internet search and advertising. However, if you think about the next billion Internet users, these are folks who are more likely to experience the Internet on a phone, as opposed to a PC," technology analyst Charles Golvin of Forrester Research told the NewsHour on Thursday. "In emerging economies, a PC is not a viable device in their life, but a phone? Absolutely. For Google to be as important a brand on the Internet for these next users, they need to be widely present on mobile phones."

The phone itself looks and functions like a combination of several earlier models including the iPhone, the BlackBerry and the Sidekick. It comes with a slide-out QWERTY keyboard, trackball and touchscreen.

"The G1 was never intended to take on the iPhone's sleek design, as the focus was always on better functionality. And first impressions are that the G1 is easy to use. Even so, at first glance, you feel that more could have been done to make this a beautiful-looking gadget. It feels and looks plastic and clunky," technology reporter Murad Ahmed wrote in a Times of London review.

But the phone provides easy access to Google applications such as Gmail, Google Talk, Google Maps with StreetView and a compass function, YouTube and others.

One problem that the phone faces is how to sell it. The iPhone was launched on the coattails of Apple's successful iPod music player, but Android is an unknown even with Google's blessing, Adegoke wrote.

"People forget these things get to customers through the retail channel and marketing," Frank Meehan, the global general manager for handsets and applications for Hong Kong telecommunications conglomerate Hutchison Whampoa Ltd. Told Reuters.

The G1 works on T-Mobile's slower data network, but it's optimized for faster networks. It can also connect at Wi-Fi hotspots. The data plan for the phone will cost $25 per month on top of the calling service -- toward the low end of the range for U.S. wireless carriers.

Shortly before the phone's release, Internet retail giant Amazon.com announced in a direct challenge to Apple's iTunes that its entire Amazon MP3 music store would be available on the new phone, Agence France-Presse reported.