T-Mobile's G1 Could Be a Tough Sell

The G1, the highly touted phone using Google (GOOG Quote) software, will hit stores next month, but the device may not be enough to put a dent in AT&T (T Quote) and Verizon's (VZ Quote) subscriber growth.

The phone, which is being made by HTC exclusively for Deutsche Telekom's (DT Quote) T-Mobile USA network, was introduced earlier this week as the first handset device to use Google's Android operating system. The G1 will be available at T-Mobile retail stores beginning Oct. 22 for $179.99 with a two-year voice and data agreement.

T Mobile's G-1: iPhone Killer?

The T-Mobile G1 offers full touch-screen functionality combined with a QWERTY keyboard, creating yet another rival for Apple's (AAPL Quote) popular iPhone 3G. The new G1 phone will feature built-in support for T-Mobile's EDGE and high-speed 3G networks, as well as Wi-Fi connections. The G1 also comes packaged with features Google users are already well acquainted with, including support for Gmail, YouTube and Google Maps.

Analysts say the new G1 is the latest in a new rush by handset makers to release attractive devices exclusive to different carrier networks, the first since the 2004 launch of Motorola's (MOT Quote) first Razr phone sparked a battle by cell-phone producers to introduce the newest, coolest handsets.

"We're entering a 'hot handset' cycle again, and we haven't been there since the introduction of the original Razr," says Craig Moffett, a research analyst with Sanford Bernstein. "This is already more dramatic than that ever was, in terms of the impact that these new handsets have on brand and carrier choice for consumers."