Update: G1 Android phone is only half 'open,' with T-Mobile lock-in

"It appears they have provided an Android phone that is only half open," said Jack Gold , an analyst at J. Gold Associates in Northboro, Mass.

[ Special report: Google Android: Invader from beyond ]

Moreover, the absence of support for Microsoft Exchange e-mail or another robust business-focused e-mail system will limit the G1's usefulness to all but the smallest businesses, Gold added. "You can't use Gmail in the enterprise."

Even T-Mobile conceded the device will be more focused on consumers. "This device will have mass appeal and something for everybody," said Cole Brodman, chief technology and innovation officer at T-Mobile USA in a webcast announcement of the $179 device. Still he quickly added: "We expect it to be more [for the] consumer, not necessarily enterprise, but a lot of enterprise workers will come ... and use it as well."

Brodman defended the locking of the device to T-Mobile's GSM and 3G HSPA networks, noting that a faster 3G network will give G1 applications the "best experience." The phone will function on 2G networks, he said, adding there will be a "good experience on 2G, but the best on Wi-Fi and 3G."

About 16 cities have HSPA service from T-Mobile Tuesday, and 22 cities will be on that 3G network by the time of the U.S. launch of the G1 on Oct. 22. About 27 markets will have HSPA service in mid-November, representing 80 percent of T-Mobile USA's 31 million customers, Brodman said.

The bigger market advantage will be in Europe, where 100 million T-Mobile International customers will have the phone in the first quarter of next year, starting with users in the U.K. in early November, said Christopher Schlaffer, innovation officer at Deutsche Telekom, which owns T-Mobile.

Inevitably, users will compare the G1 to Apple's iPhone 3G , which garnered more credibility among business users than its predecessor thanks to new features such as a robust e-mail connection with Microsoft Exchange. But Google's senior director of mobile platforms, Andy Rubin, said that while the G1 will allow users to read Microsoft Word documents and PDFs, it won't support for Exchange.

"It's a good opportunity for third parties" to provide an Exchange application, he noted, adding that the G1 supports Gmail from Google. "Gmail is pretty robust, and you can search e-mail pretty fast with it."

Brodman also said that the G1 does not yet support Skype and will not support iTunes, although it supports the iTunes code and could support it if Apple unlocked the digital rights.