According to a report by the New York Times, T-Mobile will launch a mobile phone powered by Google Inc’s Android software, making it the first operator to do so and posing a direct threat to Apple Inc’s (AAPL) popular iPhone.

The phone will hit the stores in the U.S. before Christmas, perhaps as early as October.

The new device will have a touch screen like the iPhone and other smartphones that use software from firms like Palm, Microsoft and Nokia to allow users to access the Internet.

But the screen also slides out to expose a full five-row keyboard, the New York Times report said.

T-Mobile is the number four operator in the U.S. as well as number one in Germany, Europe’s biggest market. It is also present in the U.K., the Netherlands, the Czech Republic and Poland.