T-Mobile USA will sell the first phone powered by Google Inc's Android operating system for $179, slightly cheaper than its rival, Apple Inc's popular iPhone, the wireless service said on Tuesday.
That price competes with the entry-level price of $199 for the iPhone, with a two-year contract. T-Mobile's new G1 phone is seen as Google's answer to the iPhone and is the Web search leader's biggest push yet in the cell phone market.
The phone will go on sale next month for $180 -- about $20 cheaper than its archrival, Apple's (AAPL) iPhone. We're still sorting through features and details, but overall, the phone looks impressive.
The G1 phone, made by Taiwan's HTC Corp , will debut on October 22.
But non-Google app users can still use the G1 for communication as it syncs with most other POP3 or IMAP e-mails. There's no support for Microsoft Exchange at the moment, but executives said there's plenty of opportunity for a third-party developer to create a product.
The G1 will have integrated Wi-Fi for surfing and checking e-mail, and users can also hop onto T-Mobile's expanding 3G network for mobile Web access. There's also a GPS chip that can use cellular data for assisted GPS services such as location-based searches. 
There's a full HTML browser on board that's built on the same underlying technology as the recently released Chrome desktop browser. The G1 version, or "Chrome Lite," uses the WebKit engine and has been tailored for the mobile screen.
The handset will have a multimedia player, and it comes preloaded with an Amazon application that enables users to search, download, and buy music from more than 6 million DRM-free tracks. The G1 also has Bluetooth capabilities, a dedicated search button, and users will be able to download applications from the Android Market.
The new phone will feature Android Market, where customers can find and download applications to expand and personalize their phone.
Google, which first revealed its plans for Android in November last year, aims to differentiate itself by letting multiple independent vendors offer applications to Android users.
"Because the platform is open we think Android is somewhat future proof," said Andy Rubin, Google director of mobile platforms, speaking at the launch event.
A similar strategy helped increase the buzz around Apple's second-generation iPhone, which can support more than 3,000 applications that can be downloaded from Apple's iTunes store.
Google is well ahead of rivals Yahoo Inc and Microsoft in Web search on computers and is looking to use Android to retain its dominance in search related ad sales as cell phone Web use gains prominence. But so far no clear winner has emerged for the mobile Web.
Microsoft has been gaining ground solidly with its operating system for advanced cell phones, some of which are also made by HTC.
Nokia offers mobile Web services through Symbian, the leading mobile operating system for smart phones with around 60 percent of the market. Nokia accounts for 40 percent of the global mobile device market.
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