The Wall Street Journal is reporting today that T-Mobile USA will sell the hotly anticipated HTC Dream – the first device based on Google’s Android mobile operating system – for US$199 on a contract. The report says that T-Mobile USA will unveil the device at an event in New York on September 23 next week but it is not expected to reach US stores until next month.

Google, HTC and T-Mobile USA all declined to confirm the pricing strategy for the device, but – if correct – the US$199 price point will pitch the device squarely in competition with Apple’s iPhone. T-Mobile USA rival AT&T exclusively offers iPhone 3G for US$199 for the 8GB version, rising to US$299 for the 16GB version. Vendors such as Palm and Samsung also offer entry-level smartphones in the US for around US$100. It was reported earlier this week that HTC expects to ship 600,000 to 700,000 units of the new phone by year-end, significantly higher than earlier analyst forecasts of between 300,000 and 500,000 shipments.