Google’s $199 phone to compete with the iPhone

The Google-powered cell phone is coming soon, and it will retail for $199, according to the Wall Street Journal.

The price of the new Google (GOOG) smart phone would put the device head-to-head with Apple’s $199 iPhone (AAPL). The Google phone, which features a touchscreen and is made by Taiwanese manufacturer HTC, faces some stiff competition. The iPhone 3G has generated significant interest among consumers for redefining touch-screen technology, popularizing mobile applications and significantly improving Web navigation on cell phones.

T-Mobile (DT), the first carrier that will run Google’s Android mobile software, will show off the new phone to analysts and reporters on Tuesday in Manhattan. It is expected to hit stores later this fall.

Representatives from Google, HTC and T-Mobile would not comment on the Journal’s report.

Google unveiled features of the Android operating system on an unidentified black HTC handset at a developers conference in London on Wednesday.

The HTC phone is just the first of many Google-powered phones, according to the search giant. For Google to reach its ultimate goal - driving mobile Internet use and, in turn, ads - it will need to get multiple devices in the hands of mainstream consumers. The price will also need to be right, given that companies like Palm and Samsung already offer entry-level smartphones for $100.