News

Google Inc. will take a giant step off the desktop and into the world of cellphones Tuesday when a major U.S. phone company launches a new handset built with the Internet giant's software.

T-Mobile USA, a subsidiary of Deutsche Telekom AG, is set to unveil a touch-screen device with a swiveling keyboard that incorporates some of the defining features of both Apple Inc.'s iPhone and Research In Motion Ltd.'s BlackBerry.

The device, dubbed the Dream, is built by Taiwan's HTC Corp., which until now has kept a low profile as a contract manufacturer of other companies' phones.

Regardless of whatever novel design elements HTC has incorporated, the most high-impact feature of the device will be the software created by Google, called Android.

Android is open-source software, which means it can be shared, updated and improved collectively, as well as tweaked for adding customized features or emerging technology.

Although HTC's new device is already being called "the Google phone," the search giant has no ambitions of becoming the next RIM. Instead, it wants to create a common software platform for handheld devices that makes it easier for people to surf the Web on their smart phones.

The mobile Web represents a seductive new channel of advertising for Google. In fact, Eric Schmidt, Google's chief executive officer, said recently that the company thinks it can eventually garner more money from the mobile Web than the desktop Web.

Last quarter, Google earned $1.25-billion (U.S.) on sales of $5.37-billion, almost all of which came from traditional online advertising.

T-Mobile is expected to begin selling HTC's first Android-based device next month. But Google has orchestrated a group of more than 30 companies that have committed to use Android. Known as the Open Handset Alliance, the group includes phone manufacturers (HTC, LG Electronics Inc., Motorola Inc. and Samsung Electronics Co. Ltd.), phone operators (China Mobile Communications Corp., NTT DoCoMo Inc., Sprint Nextel Corp., Telecom Italia and Telefonica SA) and software and semiconductor companies.

Google is hoping Android will become the dominant platform for mobile phones,eventually bumping Apple and RIM from their perches.

"It will be interesting to see this phone, the iPhone and the two new BlackBerry phones [the Bold and the Thunder] fight it out," said Rob Enderle, principal analyst at Enderle Group, a tech consulting firm in San Jose, Calif. "The Google phone could challenge for the lead before the end of next year."

One of the drivers of the iPhone's popularity has been the decision by Apple to let owners download their own features onto the device. Apple's online App Store lets developers sell their third-party programs directly to iPhone users. The company, which collects 30 per cent of the revenue, says the App Store sold more than 100 million applications in the first two months of operations.

Mr. Enderle says a similar store for Android-run phones could match the power of Apple's marketplace.

"Potentially yes, Google [could] have the same kind of application store, with a tighter focus on quality than Apple does," he said. "However, they don't have the marketing strength Apple does. In addition, the phone — because it is their first — will likely be buggy, and a lot of folks in their target market just bought iPhones, which could cut back sharply on the initial demand for this phone."

HTC has said it expects to ship between 600,000 and 700,000 units of the Dream, this year, a figure Mr. Enderle considers realistic.