By Scott Moritz

NEW YORK – A brief hands-on experience with the Google (GOOG) G1 phone gives the impression that after a slew of touchscreen duds from other telcos, Apple’s (AAPL) iPhone finally has a worthy rival.

The highly-anticipated HTC phone for T-Mobile (DT) was unveiled in New York Tuesday, and kiosks with technical experts were set up so media people could run the first Android-powered phone through some tricks. T-Mobile will start selling the phone Oct. 22 for $179 with a two-year contract.

The G1 has a large touchscreen, nearly the same size as the iPhone. But unlike the iPhone, there is a physical keyboard under the slide-open screen. People familiar with the iPhone will find the G1 a little lighter and thicker. The G1, for you ultra-thin fans, is about 3/4 of an inch thick, downright portly compared to the svelte half-inch iPhone.

Navigating the screen is fairly easy and there are several ways to move around. The touchscreen has a swipe capability that allows you to flick up and down or side to side. There is also a small trackball-type button at the bottom of the phone for scrolling.

The 3G network coverage at the show – only 16 cities currently have T-Mobile’s 3G networks – was fast. Google’s homepage loaded in five seconds and Google search results also popped up in five seconds. Sites like CNNMoney and Fortune took about 17 seconds to load. That is a fairly standard 3G speed.

Calls worked, and the sound was clear, for those considering the device as a phone primarily.

It is clear, however, that with Google’s support, Android and HTC have made a solid Internet device that combines web access with technology like GPS and software like Google Maps. Applications like Compass Mode, as Fortune’s Philip Elmer-Dewitt explains, gives you a 360-degree street view, a trick that has been limited to PCs until now.

The phone has so-called push e-mail through its Gmail service. As Fortune reported Monday, T-Mobile was considering a low-tier price plan that would give G1 users free e-mail without a data plan. T-Mobile technology chief Cole Brodman says the company looked at a few different pricing plans, but decided that the e-mail only data plan “doesn’t do the device justice.”

The G1 will have two monthly price options, $25 for data plan limited to 400 text messages or $35 for unlimited data. That’s compares with AT&T’s $30 and $45 data plans for the iPhone.

HTC’s touchscreen has some familiar features, like a shifting orientation if the user tips the phone on its side. It also has a zoom-in function that is done with plus and minus buttons on the screen rather than the two finger pinch or separate approach on the iPhone.

The G1 allows dragging and dropping of pictures and text, a feature the iPhone still lacks. The music player was easy to use and there is a direct link to Amazon’s music store.

Overall, and first impressions being what they are,  the G1 stands well above disappointing touchscreens like Verizon’s (VZ) LG Voyager or Sprint’s (S) Samsung Instinct. And until Research in Motion (RIMM) delivers its touchscreen Storm BlackBerry, T-Mobile’s G1 is the toughest competition yet to the iconic iPhone.

By Scott Moritz

Android lands at T-Mobile Tuesday, and as part of the effort to deliver the Google phone to the mobile market, T-Mobile is considering including free e-mail access.

The new Android-powered phone will have Google’s (GOOG) Gmail service built in, and T-Mobile executives are considering offering access to Gmail free, without the need for a data plan, says one person close to the discussions.

The HTC-manufactured T-Mobile phone will be the first of the hotly-anticipated Android-operated handsets, and one of several new challengers to Apple’s (AAPL) iPhone. The Android project was created by Google to cultivate an open application platform to operate next-generation mobile phones.  T-Mobile  – a unit of Deutshe Telekom (DT) - is expected to unveil the phone during a press conference at 10:30 ET Tuesday, and offer it for sale later this fall.

Analysts see the Google phone as the beginning of an important lead in mobile Internet advertising through ads appearing on Android powered phones. Sandeep Aggarwal, an analyst with Collins Stewart, estimates that the phone will generate $5 billion in incremental revenue for Google by 2011.

Should T-Mobile decide to offer free Gmail access, it would be seen as a big counter move to Research in Motion’s (RIMM) BlackBerry e-mail service, which costs $15 a month extra. And if telcos embrace Google’s ad-supported free e-mail, it could help drive Google’s ultimate aim to spread its successful desktop advertising business to mobile phones.

The move to provide free Gmail has risks, however.

T-Mobile could undercut its own data revenue stream from BlackBerry subscribers if users trade in their Curves and Pearls for the Android phone. But T-Mobile, the No.4 wireless shop, needs an attention-getting strategy like free e-mail to help set itself apart from bigger players like AT&T (T), Verizon (VZ) and Sprint (S).  

Google referred calls for comment to T-Mobile and a T-Mobile representative could not provide an immediate comment.

As for the HTC Android phone itself, one user who got an early trial described the slide out keyboard as a little awkward for some typing tasks. The browsing quality however was “better than BlackBerry and close to the iPhone.”

By Scott Moritz

At least Michael Dell sees value in Dell (DELL). The company founder and CEO spent $100 million late last week to acquire 4.7 million shares, according to a Federal filing Monday.

The stock rose 3% in after-hours trading Monday on news of the big insider purchase, as investors saw the move as a bold statement of confidence in the PC maker’s prospects amid a widespread tech slowdown.

Shares of Dell had dropped 21% since the company missed Wall Street analysts’ profit estimates on August 28. The downturn has tech shops like Texas Instruments (TXN) and Corning (GLW) trading at multi-year lows.

CEO Dell now owns 255.5 million shares or about 13% of the company’s stock.

By Scott Moritz

The spending slowdown hitting the technology industry has slammed Ciena (CIEN), the telecommunications equipment maker. In an earnings report Thursday, the company cited a drop in customer orders in slashing its fourth-quarter sales forecast 24% below expectations.

Ciena’s third-quarter sales and earnings were solid despite signs of sluggish demand from corporations. The Linthicum, Md.-based company posted adjusted earnings of 37 cents a share, down from 41 cents in the year-ago period, but in line with analysts’ estimates. Sales for the quarter were $253.2 million, up 23% from last year and also in line with Wall Street targets.

But looking ahead, Ciena warned that “order delays from many of our tier one service provider customers,” would likely result in fiscal fourth-quarter revenue in the $200 million range. The projected sales shortfall is well below the $263 million level analysts had been expecting.

Ciena shares fell 17% in pre-market trading Thursday.

“While current economic conditions warrant a cautious near-term outlook, the fundamental drivers of our business – growing capacity demands and the transition to more efficient, more powerful, automated networks – remain sound,” Ciena CEO Gary Smith said in a press release.

Ciena is somewhat of a niche player in the global networking sector, but its headwinds hint that spending cuts among big telcos continues and may be steepening. Rivals like Cisco (CSCO) and Ericsson (ERIC) were down 1% in early trading on news of Ciena’s big miss. Ciena also joins Corning (GLW) as the second tech shop to warn of slumping orders in recent days.

By Michal Lev-Ram

MOUNTAIN VIEW, Calif. – If Google’s new Chrome Web browser succeeds, going online will be an all-Google experience.

“The Web has evolved pretty dramatically, but the underlying browser architecture is still very similar to the original Netscape browser,” Sundar Pichai, Google’s vice president of product management, said at a press conference Tuesday at the company’s Silicon Valley headquarters.

Google (GOOG) says Chrome was designed to be “streamlined and simple.” The browser is available for free download in 100 countries starting Tuesday. Initially it will only work on Windows computers, though versions for Mac and Linux operating systems are being developed.

According to Pichai, Google’s intent is to “drive the whole Web platform forward” and thus drive more people to the search giant.

At first glance, Chrome doesn’t look all that different from Mozilla’s Firefox, a competing browser. But unlike Firefox, Chrome combined the address and search boxes to let people search for information and Web sites by entering keywords into the same bar.

“What we did is we smashed the two boxes together,” said Ben Goodger, a software engineer at Google and former Mozilla employee. “We call it the ‘Omni Box.’ “

The Omni Box lets users search for information and go to Web sites directly by typing into the same bar. Other Chrome features include movable “tabs” and an “incognito” window that lets people browse without saving their search history – a feature found on other browsers and which bloggers have nicknamed ”porn mode.”

Google also said its new Web browser will be faster and more reliable than existing browsers. On Chrome, each tab operates separately so, if one crashes, it won’t affect the main browser window.

Chrome is being released as an open-source project, meaning developers will have access to build new features for the browser. Google said its engineers worked on the new browser for about two years.

“It is a huge investment for us,” said Pichai, who added that many Googlers are already using Chrome – including the company’s co-founder Larry Page, who made an appearance at the press conference.

But Chrome is entering a competitive market that Microsoft (MSFT) has dominated for years. The company’s Internet Explorer, which comes pre-installed on computers, accounts for 72% of the browser market. Runner-up Firefox has a 20% share.

“The browser landscape is highly competitive,” Dean Hachamovitz, general manager of Microsoft’s Internet Explorer, told Fortune. “But people will choose Internet Explorer 8 for the way it puts the services they want right at their fingertips, respects their personal choices about how they want to browse and, more than any other browsing technology, puts them in control of their personal data online.”

So is there room for another browser?

Yes, says Citi Investment Research analyst Mark Mahaney.

“There is market demand for a browser that is speedier, simpler, safer, and stabler than IE,” Mahaney wrote in a report Tuesday morning. “What is unknown is whether Chrome is that browser.”

By Scott Moritz

Alcatel-Lucent (ALU), the struggling telecom equipment maker, on Tuesday named an old hand as its new chief executive. Former British Telecom (BT) chief Ben Verwaayen, who once ran Lucent’s international sales operations, has been hired to replace CEO Pat Russo.

Alcatel-Lucent also announced that Philippe Camus, the former co-chief of Airbus parent EADS, will take over as chairman, replacing Serge Tchuruk who, along with Russo, announced his resignation earlier this summer.  The news comes days after news reports identified Mike Quigley, the former president of Alcatel-Lucent, as the company’s top pick – a move that some analysts cheered.

Alcatel-Lucent shares fell 2% in late morning trading Tuesday as investors signaled their disappointment with the new hires.  As head of one of the world’s largest networking equipment companies, Verwaayen faces a difficult task of unifying the company’s disparate divisions some two years after New Jersey-based Lucent and France’s Alcatel combined.

“What a missed opportunity,” said Telecom Pragmatics analyst Sam Greenholtz after the announcement. Given Verwaayen’s international background, Greenholtz sees his appointment as a sign that the company is focusing on its European operations at a time when, he says, the company’s customer relationships in the United States are weakening.

“I am sure these guys that were chosen are worthy of the job but, it is not going to fix the poor relationships in the U.S.,” said Greenholtz.

Verwaayen spent four years at Lucent, with mixed results. He ran the company’s overseas sales and was a key proponent of the company’s vendor-finance strategy, which makes loans to customers to finance equipment purchases. Many of the loans turned sour in the post boom industry collapse, and Lucent was left holding billions of dollars in bad debt. At the same time, after the dot.com bubble burst, Verwaayen was credited with helping the company trim its product offerings and focus on a core group of financially-healthy customers.

Verwaayen left Lucent in 2001 to make way for Pat Russo, who was serving as CEO at Eastman Kodak (EK). Verwaayen then ran BT for for six years, overseeing the phone giant’s massive network upgrade known as 21st Century Network.  The expensive project has taken longer than analysts had expected, and with BT’s shares hitting a five-year low in March, Verwaayen was gone by May. 

For their part, Russo and Tchuruk went on to engineer the $11 billion merger of Alcatel and Lucent in 2006. But they have struggled from the start to integrate Lucent’s products and operations, based in New Jersey, with Alcatel’s Europe-based business, headquartered in Paris. Making matters worse, Alcatel-Lucent is facing stiff competition from Ericsson (ERIC) and China’s Huawei, among others. Amid the cutthroat rivalry, sluggish economies in the United States and Europe have forced phone companies to cut their networking-equipment spending.

In the nearly two years since the Alcatel-Lucent merger, sales have fallen 7.3% and the stock is down 55% as the company announced round after round of layoffs.

At the top of Verwaayen’s to-do list at Alcatel-Lucent: to bring the bifurcated company together and boost earnings. In July, Alcatel-Lucent posted its sixth quarterly loss in two years, a loss that prompted Russo and Tchuruk to announce they were leaving later this year.

Pushing further into Microsoft’s (MSFT) territory, Cisco (CSCO) announced Wednesday that it has signed a $215 million deal for business e-mail shop PostPath.

The move bolsters Cisco’s strategy to expand into the office software market by adding e-mail and calendar services to its existing roster of so-called enterprise networking features. PostPath, based in Mountain View, Calif., develops Linux-based software that gives corporate customers an alternative to Microsoft’s Exchange system. PostPath says its e-mail servers are compatible with a nearly all business systems, including Apple (AAPL) and its iPhone. 

Cisco, in announcing better-than-expected quarterly profits but a lower growth forecast, said earlier this month that it planned to make acquisitions in adjacent markets outside its core business selling Internet equipment.

With Google going door-to-door trying to sell its business software to Microsoft clients, this latest move by Cisco into e-mail isn’t necessarily a great comfort to the Redmond, Wash. giant. Given Cisco’s dominance in corporate IT gear, there is potential for Cisco to offer an alternative to Microsoft Exchange.

Cisco plans to add PostPath’s applications to its Web-based services, also known as “cloud computing.” Software providers have for years been looking for ways to let business users access their desktop computing tool wherever they happen to be. This way employees could collaborate on tasks using features like instant messaging, video conferencing or document-sharing services.

Microsoft’s quest to extend its desktop software dominance to the Web was a driver behind its failed bid for Yahoo earlier this year.

By Scott Moritz

A year after jumping ship, former Alcatel-Lucent president Mike Quigley may be returning to take the top job at the telecom gearmaker.

Quigley, who was an early architect of the Alcatel-Lucent (ALU) merger and later ousted under CEO Pat Russo’s term, has been picked by the company’s nomination committee to replace Russo, according to a Reuters report. The company declined to comment.

In July, after Alcatel-Lucent posted its sixth quarterly loss in two years, Russo and chairman Serge Tchuruk announced they were leaving later this year.

Under Russo and Tchuruk, the company struggled to integrate Lucent’s products and operations, based in New Jersey, with Alcatel’s Europe-based business, headquartered in Paris. In the nearly two years since the merger, sales have fallen 7.3% and the stock is down 55% as the company announced round after round of layoffs.

Heightened competition from outfits like Ericsson (ERIC) and China’s Huawei, along with networking equipment spending cuts by phone companies and a sluggish economy in the United States and Europe have squeezed Alcatel-Lucent’s performance. But some analysts see a big part of the company’s problem as a lack of focus and an inability to move in the same direction that its customers were headed.

“This is a great move,” said Telecom Pragmatics analyst Sam Greenholtz. He says Quigley had butted heads with Tchuruk and likely has a better feel for the products that telcos, the bulk of Alcatel-Lucent’s customers, are looking for.

As Alcatel-Lucent’s CEO, Quigley’s first job would be to finally integrate Lucent and Alcatel’s operations, says Greenholtz. “They have to get this merger done, and I think Mike will make some hard decisions that Serge and Russo couldn’t make,” Greenholtz said.

Alcatel-Lucent shares surged 5% Tuesday on word of Quigley’s possible appointment.

By Yi-Wyn Yen

Finally, some good news for Yahoo. Major tech advertisers are shifting a bit of the money they spend on Google (GOOG) to Yahoo (YHOO), according to a new report by marketing firm Covario.

Advertisers from 12 tech companies, including Research In Motion (RIMM), Hewlett-Packard (HPQ), Intel (INTC), and Lenovo, collectively moved 4% of their U.S. search advertising budget from Google to Yahoo in the second quarter. Covario notes this is the first quarter that spending for Yahoo’s paid search increased in two years.

However, the incremental shift should give little reason for Google to worry. These tech advertisers, whose online ad spending is tracked by Covario, are still spending the bulk of their money on Google. The search king received 81.2% of the paid search spending from these advertisers for the second quarter compared with just 14.3% for Yahoo. Microsoft (MSFT) came in a distant third with 4.3%.

Wall Street analysts say the small shift in ad dollars from Google to Yahoo is not surprising. Google has deliberately throttled back on paid search – those blue text ads that appear on the right side of a Google search results page - to give Internet users a better browsing experience. Direct marketers who still want to place their ads somewhere could be moving their spending to Yahoo.

Explains Thomas Weisel analyst Christa Quarles: “Say I type in ‘Harry Potter’ into Google. I don’t get any ads. But put those keywords into Yahoo and you get ads up the wazoo. The bigger question is, has Google gone too far with their initiative?”

Jonathan Rosenburg, Google’s top executive for product management, says the company is unlikely to change its game plan. During Google’s earning call last month, Rosenburg acknowledged that ads shown on the site were “at an all-time low relative to the last few quarters.” The company will continue to work on improving the quality of its ads. “Larry [Page] often says that we’d be best off if we just showed one ad, the perfect ad,” Rosenburg said.

If Google doesn’t reverse its less-is-more policy, Yahoo could continue to benefit from a shift in ad dollars for the current quarter.

By Yi-Wyn Yen

Last month Google’s chief economist Hal Varian discussed the durability of the search giant’s business model during the company’s quarterly earnings call. “During periods of slow economic growth, the last thing an advertiser wants to cut is its spending on search-based advertising,” Varian said.

In other words, display advertising (the flashy and creative side of the business) will take a bigger hit than paid search (the directly-targeted and accountable portion that Google excels at) as marketers tighten their purse strings.

Microsoft (MSFT), however, argues that search ads get too much credit for click-throughs while display ads don’t get enough. The company, which is struggling to build an online ad business to compete with Google (GOOG), is challenging that notion with a new tool that measures the effectiveness of display advertising in an online ad campaign.

Atlas Institute, which is part of Microsoft Advertising’s research division, has released a study that shows that people are more likely to click on ads or buy things online when they are exposed to display ads. In a study called “Illuminating the Alltel Wireless sales funnel,”  those who clicked on search ads for the cell phone maker were 56% more likely to buy a phone or wireless plan from the company when they saw Alltel’s display ads compared to those who only saw Alltel’s search ads.

Search ads typically get the most credit for contributing to a sale because they’re the last ad that is viewed. “When someone is ready to take action by clicking on an ad or buying something, they will go to a search engine and type in what they’re looking for,” explains Morris Martin, an analyst with Atlas Institute who led the study. “The very last ad is the one that gets 100% of the credit. We did this case study to get a better understanding of the synergies between search and display.”

Microsoft’s new measuring tool tracks branded ads that an Internet user comes across before making a purchase. The tracking system, which gathers the wealth of data through the Atlas ad server, then assigns a value for all the ads that contribute to a successful sale. Along with Alltel, Microsoft says 14 other advertisers, including Best Western, Citi Cards and Sprint (S), are testing the product

Google spokeswoman Lynn Tornabene says that its display ad server Doubleclick introduced a similar tracking tool a year ago but would not say how many clients are using the product. She declined to comment on the Microsoft study.

Fundamentally marketers know it’s not all about search ads. It’s just that Google knows how to be at the right place at the right moment. “Google is so close to the point of sale,”  says Jeffrey Lindsay, an Internet analyst with Bernstein. “When people type in those keywords, they are at an extreme point of sale. That’s well understood. Everyone knows Google gets a whole heck of a lot more credit for searches than what is attributable.”

Marketers say they welcome tools to get better gauge the impact of display ads.  “I don’t think media buyers are making decisions based on [these tracking systems] yet,” says David Cooperstein, the chief marketing officer for Burst Media, an online ad agency. “But they are asking about it a lot more than they were six months ago. As this media matures, brand advertisers will start to look for more response the way direct marketers do.”