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T-Mobile's New myTouch 3G

T-Mobile USA hopes there's room for at least one more device in an already crowded smartphone market. On June 22, Deutsche Telekom's ( (DT)) U.S. cell phone arm is releasing myTouch 3G with Google, its second phone based on the Android operating system, developed by a Google-led consortium. Lighter, smaller, and slimmer than the first Android device, the myTouch 3G represents an ambitious effort by T-Mobile to benefit from booming demand for smartphones. But it's up against some formidable rivals, including Apple's ( (AAPL)) iPhone 3G S, Palm's ( (PALM)) Pre, and a variety of BlackBerry handsets from Research In Motion ( (RIMM)). The myTouch 3G will be the first in a series of devices that carry the name. At the very least, T-Mobile wants the new Android phone to sell more units than its earlier cousin, the G1, which T-Mobile released in October, aiming for tech-savvy customers. The myTouch "will be the centerpiece [of our marketing] for the second half of our year," says Cole Brodman, chief technology and innovation officer at . "I think this phone will do better than the G1, because it's aimed at a wider audience." Like the G1, the myTouch is manufactured by . T-Mobile will continue to sell the G1. "a strong showing"By December 2008 the G1 had sold more than 1 million units. In the first quarter it was the fifth-best-selling smartphone in the U.S., behind several BlackBerry devices and the iPhone, according to consultant . "It was a strong showing," says Ross Rubin, director of industry analysis for NPD. The new myTouch features several improvements. In an exclusive, hands-on software demonstration with, the myTouch felt light and elegant, more akin to the iPhone than the bulkier, squarish G1. "What [myTouch] offers is a significant size reduction, bringing it more in line with competitors' smartphones," Rubin says. It lacks the Qwerty keyboard found on the G1, instead boasting a virtual keyboard on its 3.2-inch touchscreen that vibrates when pressed and changes orientation from portrait to landscape when used in most applications, such as the browser. During a test on June 21, the on-screen keyboard proved easy to use and its predictive text features made typing simple. The myTouch will come in white, black, and a shade of burgundy it calls merlot. It weighs 4.1 ounces, compared with 5.6 ounces for the G1. More important, the myTouch offers longer battery life—up to six hours of talk time, vs. five for the G1. Short battery life was one of the biggest complaints about the first Android phone. The new phone features the same processor as the G1 but offers twice as much onboard memory: 512 megabytes. It also has a slot for microSD cards. But to really wow consumers, the myTouch will need to be distinguished by more than a favorable comparison with G1. So T-Mobile plans to emphasize how users can personalize the phone with 40 specially designed accessories that can be purchased separately. In-store T-Mobile reps will work with shoppers to show features and downloadable software applications tailored to a person's specific interests and needs. "This is a fantastic idea and exactly the way wireless devices need to evolve," says Chris Collins, a senior analyst at consultant . "I believe this is the first product that made personalization a major selling point." exclusive: this sherpa learnsSales staff are putting particular emphasis on an app called Sherpa, which boasts a feature designed exclusively for T-Mobile by Geodelic. Sherpa uses a person's location to pull up relevant local information, such as nearby restaurants, gas stations, and even surfing conditions. Users can click on thumbs up or thumbs down icons to help Sherpa learn whether a particular listing should be displayed as prominently next time. While Sherpa also may become available for the iPhone later this year, the learning feature will remain exclusive to T-Mobile, says Rahul Sonnad, CEO of Geodelic, which in December raised a $3.5 million round of funding from and . The new phone will be available for pre-order for existing T-Mobile customers for $199 with a new two-year contract starting on July 8, with shipments beginning on July 29. The phone will be available to the general public in early August and will come packaged with headphones, a charger, a USB cord, and a cleaning pouch. T-Mobile plans to introduce two other Android handsets, whose manufacturers haven't yet been announced, later this year. The phones arrive at a time of intense competition in the U.S. smartphone market. AT&T ( (T)) and Apple already offer an older model of the iPhone for $99 with a two-year contract—$100 less than the myTouch. And Apple's App Store has 50,000 apps, about 10 times the number available through the comparable online marketplace for Android apps. "It's already a crowded field," Collins says. "There's a lot of excitement about those other devices, and [myTouch's] success is by no means guaranteed." But the myTouch could help keep existing T-Mobile customers who might have considered switching to AT&T for the iPhone, he says. T-Mobile says it's not worried about price pressure. "Our goal with [the myTouch] is not to chase other price points," Brodman says. "We think it's more of a premium experience." In the increasingly competitive smartphone market, it will have to be.
Kharif is a reporter for Bloomberg News and Bloomberg Businessweek in Portland, Ore.

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