The fabled 'Google phone' officially launches in October, but it has already hit Silicon Valley.

Google has handed a few hundred phones to its internal teams of engineers for real world testing. These reference models, presumably preproduction versions of the HTC Dream, are inconspicuous. Thicker than an iPhone, the flat, grayish-black hunk of plastic does not call attention to itself. It takes a savvy pedestrian to spot its identifying marks: a bank of serial numbers engraved across its face and backplate and a discrete white "with Google" badge stamped on the back.

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But they are out there.

For nearly a year, Googlers have toiled away in Mountain View, Calif., on Android, the new mobile platform that many developers had hoped would have as great an impact on the mobile world as Apple's iPhone. Glu Mobile chief Greg Ballard prophesied last June that Google's system would be easier to develop applications for than those powering traditional handsets and would allow developers to take advantage of data such as contact lists and Global Positioning System information stored on the phone.

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Now, enthusiasm is cooling. One member of the development community says the prospect of a Google phone was exciting. But Android has come to resemble many other software platforms--and consumers are less likely to stand in lines for software than for hardware.

On Tuesday Google announced that the first Android-equipped phone, a 3G- and WiFi-capable HTC handset, would ship in October with T-Mobile in the United States. Although neither T-Mobile nor Google have confirmed the price, analysts have widely speculated that the phone will cost about $199.

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According to the development community, a bank of tools and games will be packed with the operating system. Additional free applications will be available for download at launch. Paid applications, however, which typically are more elaborate programs, are not expected to be available until early next year.

Forbes.com spotted a phone on the streets of San Francisco. It resembles alleged HTC Dream footage leaked in a blurry video on YouTube in August. A large touch screen eats up most of the phone's available real estate. However, unlike Apple's device, it boasts a palette of physical buttons (both for selection and call initiation) and a small trackball for zipping across its multipaged menus. The screen slides up to reveal a shallow keyboard. Think of it as an anorexic T-Mobile Sidekick.

Tapping out search phrases on the keyboard is not difficult, but it is awkward. Unlike similar devices with hide-away keyboards, only the screen of the Google phone slides upwards. This creates an obstruction between your right-hand thumb and the keyboard.

The model we tried out had few onboard applications. The main screen, which switched between portrait and landscape modes depending on the phone's orientation, offered native Google applications including Mail and Docs. The next screen was dedicated to a Google search bar. It was unclear whether users could create additional pages or customize existing ones. However, a small tab running along the bottom (or right-hand side) of each page opened up a compact menu screen for accessing additional programs and settings.

Snap judgment: Android is a zippy operating system but is tripped up by the user interface. The convergence of physical buttons and touch screen makes first interactions slightly confounding. For instance, you have to use the touch screen (by tugging it upward with your finger) to open the menu system--even though the trackball can zip between the two pages. And, while you dial phone numbers directly on the touch screen, you have to press the physical call button to connect.

It is unknown how old these Googler-toted phones are. Presumably, the Google phone has undergone both hardware and software revisions since they were deployed. But, as with all Google products, Android will undoubtedly be released in beta version.