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Google, T-Mobile set to unveil Dream phone*

September 23, 2008 |  5:30 am

UPDATED 7:50 A.M.: T-Mobile said this morning that the phone, officially called the G1, will go on sale in the U.S. on Oct. 22, and it will cost $20 less than expected: $179 with a two-year service plan. A previous version of this post said it would cost $199.

The phone, pictured below, will go on sale in Britain in November and other European countries the first quarter of 2009. We'll have more details in a new post soon.


Andy Rubin has a utopian vision of the future of mobile: Cellphones, which are already more common in the world than cars and nearly as powerful as personal computers, will allow you to remain connected at all times.

The G1 phone, which runs Google's mobile operating system Today Google is taking its biggest step to date in pushing the vision that Rubin, Google’s director of mobile platforms, promoted: The Internet giant and T-Mobile are showing off the first handset to run Google's new mobile operating system, Android. (Android was the name of Rubin's mobile phone software company, which Google bought in 2005.) The $179 phone, code-named the Dream, is being manufactured by HTC.

With the Dream and other phones like it in the pipeline, Google hopes to ring in an era in which consumers have more freedom and flexibility. Most important for Google, as the world increasingly logs on to the Web from cellphones rather than computers, consumers will have easy access to its services such as search and maps while on the go.

"In five years, the Internet will be with you wherever you are," Rajeev Chand, a wireless analyst at investment bank Rutberg & Co.

It's not quite there yet. Right now, many people still don’t have wireless data plans or so-called smartphones. The U.S. mobile Internet audience is about a quarter that of personal computers. But analysts say the mobile Web could eventually eclipse the traditional Web.

For Google to maintain its edge, it must maintain its early lead in mobile search and play a leading role in revolutionizing Internet service on cellphones the way it did on personal computers. Just because it dominates on personal computers doesn't guarantee it will dominate on cellphones.

"The cellphone is the world’s most popular device, and it is going to be the world’s most popular way to access the Web on a global basis," said Ross Rubin, NPD Group’s wireless and consumer-tech industry analyst. "Google depends on access to the Web. Without access to the Web, its business would die. Google certainly has a vested interest in ensuring no one company becomes so dominant in cellphones or cellphone operating systems to the point that it restricts access to Google’s services."

The Dream, which will go on sale in the coming week, will sport the Google brand and come with a two-year service contract with T-Mobile, according to published reports. It also will sport many of the same features as ...

... Apple’s iPhone and Research in Motion's BlackBerry, including a large touch screen. Unlike the iPhone, it will have a keyboard.

Open Handset AllianceExpectations for the Dream phone are high, said Roger Entner, telecommunications analyst at Nielsen IAG. That said, it's not expected to make the same kind of splash as the iPhone. Instead, Google is aiming more for a sea change in an industry that has resisted them.

To that end, Google has invested heavily in Android, which it announced last November. It entered a spectrum auction to put pressure on the wireless industry to be more open to different devices and services. And Google also has recruited independent software developers to create free applications that you can download from the Android Market.

Despite its money and cachet, Google faces some stiff challenges. It created a coalition called the Open Handset Alliance, which includes U.S. carriers such as Sprint Nextel and T-Mobile. But the LiMo Foundation, a consortium of industry players, is also making free Linux software to run on mobile phones. In May, Verizon Wireless said it would use the LiMo software, although it did not rule out using Android. AT&T has not made a decision. Google has another rival in Symbian, which Nokia said it would buy in June, to make such mobile operating system software available free.

Google is hoping the Dream will sell briskly and encourage more device manufacturers and carriers to develop Android-powered phones. Sprint and China Mobile were supposed to launch Android phones in coming months but hit delays. The promises of a cut of Google-like riches may also entice them. The wireless industry has long sought a way to lure advertising online. It hopes someday to target advertising to a cellphone user's location.

Analysts say that changing the entrenched wireless industry is a monumental task. Historically, the industry has kept tight control over how devices are designed and what data services are available. Carriers were slow to work with Internet companies, in hopes of cornering the market on search and other services themselves, analysts say. But Google, Yahoo and others proved too formidable, said Forrester Research’s Charles Golvin.

"The carriers realized, ‘We had better figure out a way to work with these guys.’ They have done so in halting steps so far," Golvin said.

Although Google has played a key role by pressing the industry to open up, the iPhone was the true catalyst. The Apple gadget stormed the wireless industry, creating demand for data services and new applications, said Omar Hamoui, chief executive of mobile advertising start-up AdMob. "We have found that as devices have progressed more toward openness, adoption is skyrocketing," he said.

IPhone users have downloaded applications from the applications store by the thousands.

"Consumers have benefited tremendously from the iPhone’s introduction," said Ford Cavallari, a partner with Monitor Group, a consulting firm. "In making this effort, Google is going to make it an even better marketplace."

Chand, the Rutberg analyst, credits both Google and Apple with shaking up the wireless industry, spurring innovation and more choices for consumers, who "have a lot to thank Google for," he said.

-- Jessica Guynn

Top, G1 phone. Credit: T-Mobile

Bottom, Open Handset Alliance logo. Credit: Danny Sullivan via Flickr