Sept. 23 (Bloomberg) -- T-Mobile USA's so-called Dream phone, the first handset with Google Inc. mobile software, is unlikely to match the debut of its top competitor, the iPhone.

T-Mobile may sell fewer than 500,000 of the phones in the next three months because they don't have the same cachet as the iPhone, Forrester Research Inc. analyst Charles Golvin in San Francisco said. Apple Inc. sold more than a million of its latest iPhones in the first three days, and 1.39 million of the original devices within three months of their June 2007 debut.

``I doubt that anything can match the hoopla that has been created by Apple,'' said Shiv Bakhshi, who tracks mobile devices for research company IDC in Bellevue, Washington. ``That cult following may be missing with the Google phone.''

The projections underscore the challenges T-Mobile and the 34 companies involved in Google's Android project have in unseating Apple and Research In Motion Ltd.'s BlackBerry. IPhone and BlackBerry capture almost two-thirds of the market in the U.S. for smart phones with e-mail and Web access, IDC says.

U.S. sales of these phones will soar 80 percent to 36 million units this year, according to IDC.

T-Mobile, the fourth-largest mobile-phone company in the U.S., plans to unveil the Google-powered phone today in New York. The company, a unit of Bonn, Germany-based Deutsche Telekom AG, will start selling it in the fourth quarter.

Code Name

The iPhones use Dallas-based AT&T Inc.'s wireless network, the largest in the U.S. with 72.9 million customers, more than twice T-Mobile's 31.5 million. Verizon Wireless in Basking Ridge, New Jersey, and Overland Park, Kansas-based Sprint are the No. 2 and No. 3 carriers.

Bellevue, Washington-based T-Mobile isn't confirming much beyond the unveiling date, including the new phone's name. Dream is the code name for a new handset made by Taoyuan, Taiwan-based HTC Corp. that blogs including Android Community say T-Mobile will use.

T-Mobile representatives and Google spokeswoman Erin Fors declined to comment.

T-Mobile will sell 400,000 of the Google phones in the fourth quarter, according to Chris Ambrosio, executive director of mobile-device researcher Strategy Analytics Inc. Ambrosio said the phone will likely go on sale in the second half of the quarter.

Google started a group last November with carriers including T-Mobile and Sprint Nextel Corp., chipmakers such as Intel Corp. and handset builders including Motorola Inc. to work on an operating system and applications for Web-enabled phones.

Fighting AT&T

Google, owner of the most popular Internet search engine, says the handsets will provide a new platform for selling advertising. Revenue from search ads on phones may double to $181.1 million in the U.S. next year and reach $3.8 billion globally by 2012, according to New York research firm EMarketer Inc.

T-Mobile's network beat out AT&T in three out of six U.S. regions in a call quality survey by J.D. Power & Associates in Westlake Village, California. The carriers tied in another part of the country, according to the 2008 survey.

To compete with AT&T's heft and Apple's advertising prowess, T-Mobile may have to pin its marketing efforts on Google, said Davis Brewer, lead strategist for Spark Communications in Chicago, a unit of ad company Publicis Groupe.

``Consumers really know the Apple brand, so there was a lot of buzz about what a Mac phone would look like,'' Brewer said. ``Where the buzz is falling a little bit short for the Dream is that T-Mobile and HTC don't quite have that kind of brand cache.''

Little Late

Google has been courting advertisers at its Mountain View, California headquarters, where it serves potential clients fried chicken and demonstrates applications that can be used for Web ads on phones, said Brewer, who toured the campus in July.

Deutsche Telekom fell 12 cents to 10.57 euros at 3:47 p.m. in Frankfurt. The shares had lost 29 percent this year before today. Google, down 38 percent in 2008, rose $3.41 to $433.55 on the Nasdaq Stock Market at 9:47 a.m. New York time.

Research In Motion's BlackBerry operating system dominates the market for software that runs smart phones in the U.S., followed by Microsoft Corp.'s Windows Mobile, according to IDC.

``Google may be coming a little late to an already crowded party,'' said Didier Scemama, a technology analyst with ABN Amro Holding NV in London, who doesn't own the shares.

Google's Android is based on the free Linux operating system and is open to any programmer who wants to develop features for wireless devices. Software developers can build applications to run with the program, enabling partners to customize phones and services for their subscribers.

By offering code anyone can use, Google is seeking to break the hold phone companies have over what applications work on which device. New products may include ads for shops and movie theaters near the phone user, or mobile access to services such as EBay Inc.'s auctions.

``The impact of Android as a platform will be significant, but I think the impact of any particular device will be pretty limited,'' Forrester's Golvin said.

To contact the reporters on this story: Lauren Berry in New York at lberry4@bloomberg.net; Amy Thomson in New York at athomson6@bloomberg.net

Last Updated: September 23, 2008 09:50 EDT