At a press conference in New York yesterday, Google and T-Mobile showed off the long-anticipated G1, a powerful smartphone that runs Google's Android operating system for mobile devices.

The handset, priced at $179, will be available from T-Mobile on October 22. It boasts features to rank it at the top end of the smartphone market, and its software offers some neat surprises and tricks. At the same time, the G1 undoubtedly lacks the sparkle of the iPhone, probably its closest competitor. Furthermore, some experts question whether Google's scheme for delivering new applications for the phone--an online store called Android Market--could run into problems that slow down mass adoption.

As expected, the G1 has a touch screen and a pullout QWERTY keypad, which make it thicker than the iPhone and some other smartphones. It can make use of T-Mobile's faster 3G mobile network, and it has GPS and Wi-Fi capabilities built in. The G1 comes equipped with a 3.1 megapixel camera (but no video camera), an accelerometer to measure motion of the device and orientation of the screen, and a Bluetooth receiver for hands-free devices. The G1 also has one unusual hardware feature: a built-in compass that can determine the direction in which the phone is pointed.

While the G1's hardware doesn't make it stand out from the crowd, its software is already causing excitement. Android is designed to enable easy access to Google's Web applications--including its calendar, e-mail, and mapping services--and to instant messaging applications like Google Talk and AOL's Instant Messenger. The G1's Web browser, based on the same software used to make Google's recently released desktop browser, produces scaled-down Web pages that look, for the most part, as they do on a normal computer screen. And the phone's built-in compass has been integrated into Google Maps Street View to let users pan around a streetscape by moving the handset in the corresponding direction.

These applications come as standard, but Google and T-Mobile representatives say that third-party applications could take the device well beyond these basics. A slew of applications have already been released, and some have won funding via Google's Android Challenge, a competition to encourage software engineers to develop for the platform. Locale changes the phone's settings based on the time of day, the phone's location, and the owner's calendar, automatically turning the ringer off during meetings, for example. Another downloadable application, Shop Savvy, lets users take a picture of a product's barcode with the built-in camera and instantly compare prices from around the Web.

"Several years ago all phones were controlled by handset [makers] with requirements coming from carriers," says Rich Miner, vice president of mobile at Google. "First with Microsoft, then Apple, and now Google, you have people who really understand software and the user experience on these devices. You combine that with higher speed networks and better screen resolution, and all of a sudden, the mobile Internet is here."