Google Rolls Out Rival to iPhone

 
 
By Reuters -  |  Posted 2008-09-24
 
 
 

NEW YORK (Reuters) - T-Mobile has rolled out Google's answer to the iPhone as the Web search giant makes its biggest stab yet at leaping from consumers' computers into their pockets with a device cheaper than rival Apple offers.

The widely-anticipated G1 phone, introduced on Tuesday made by HTC Corp (2498.TW: Quote, Profile, Research, Stock Buzz), has a touch-sensitive screen, a computer-like keyboard, Wi-Fi connections and uses Google's new Android operating system.

Available in three colors -- black, white and brown -- it includes familiar Google services, such as Google Maps, Gmail and YouTube. Like the iPhone and other "smartphones" the device is meant to broaden the appeal of Web surfing on the go.

"If we see more mobile Web usage we'll be happy," Google co-founder Sergey Brin told Reuters after arriving at the launch on roller-blades.

His company, a powerhouse in Web advertising, would benefit if Android led more cell users to spend time on the Web, no matter which phone they are using.

Google is well ahead of rivals Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) and Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) in Web search on computers, but it wants to use Android to ensure this dominance carries over to the phone when mobile Web surfing becomes more popular.

But while no clear mobile Web winner has emerged so far, Google faces stiff competition from longer established phone players such as Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz), Research In Motion Ltd's (RIM.TO: Quote, Profile, Research, Stock Buzz) BlackBerry and Microsoft, as well as Apple.

Analysts saw the device as a "good first step" rather than an iPhone killer, but some expect as many as 400,000 to be sold in the United States by year-end. A T-Mobile executive said the estimate was "not incredible."

When it becomes available to U.S. consumers on October 22, the G1 will sell for about $179 -- slightly cheaper than the entry-level price of $199 for Apple Inc's (AAPL.O: Quote, Profile, Research, Stock Buzz) iPhone -- with a two-year contract.

The G1 will be launched by T-Mobile's UK unit in November and other European countries such as Germany, Netherlands and the Czech Republic in the first quarter of 2009.

"The G1 doesn't threaten Apple now, but Android has raised the bar for competing mobile platforms. The bigger concern here is for Microsoft and Nokia if Google can win over the hearts and minds of operators and developers," said Geoff Blaber, an analyst with British firm CCS Insight.

NEXT GOOGLE PHONE MAY CHANGE

Both Google and Apple are wooing developers to create applications for their devices, but unlike Apple, which keeps a tight grip on the iPhone's hardware and operating software, Google's Android is open to be changed by outside developers.

Asked if the user interface of future Google phones would look anything like the first one, Andy Rubin, who developed Android for Google, said: "Its completely replaceable."

For example, Leslie Grandy, T-Mobile USA's product development vice president sees the carrier selling a range of Google-powered phones in future, including more basic ones without a touch-screen or full keyboards.

The new phone features Android Market, where customers can find and download free applications to expand and personalize their phones. T-Mobile's Grandy said the marketplace would eventually include applications that are sold for a fee.

"Because the platform is open, we think Android is somewhat future proof," Rubin, Google director of mobile platforms, told the audience at the launch.

A similar strategy helped increase the buzz around Apple's second-generation iPhone, which can support more than 3,000 applications available online.

Amazon.com's digital music store will be loaded on the G1, allowing users to search, download, buy and play more than six million songs, pitting it against iPhone's music player.

Android also competes with Microsoft's Windows Mobile operating system, which has been solidly gaining ground. HTC Chief Executive Peter Chou told Reuters his company, which has concentrated on Windows phones so far, is already planning more Android and Windows devices.

Between the United States and the United Kingdom, Chou said he expects to have sold more than 400,000 G1 by the year end.

Android's biggest competitor is Symbian software, which represents 60 percent of the smartphone market and which Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz) plans to buy out and open to other developers.

Nokia, which has about 40 percent of the mobile phone market, has also branched into mobile Web services such as mapping that compete directly with Google. Speaking at a conference in Chicago on Tuesday, Nokia CEO Olli-Pekka Kallasvuo said he was not worried by new competition.

"The entry of Apple and Google -- in fact today in a very concrete way -- in mobile communications is the best possible illustration of the fact that there's a lot of possibility here," he said.

(Additional reporting by Tarmo Virki in Helsinki and Benjamin

Klayman in Chicago; Editing by Derek Caney and Andre Grenon)