In the war against the Jesus phone, Motorola has a new contender. The cellphone provider has manufactured the latest Google phone, set to hit Verizon stores next week. Droid ads take on AT&T’s iPhone directly, explaining functionality the iPhone does not have and what Droid does right, making it look like Verizon’s trying to make a big play for the iPhone’s business.

But Droid doesn’t have to knock the iPhone off its popularity pedestal to pay off for Verizon, Motorola or Google. It just has to do better than the rest of the competition.

The battle for the smartphone market is becoming more intense as consumers gravitate toward higher functioning mobile devices. Out of all cellphone owners, 39% now own smartphones. And that is only expected to escalate, thanks greatly to the appeal of the iPhone.

While that may have some phone manufacturers — and telecommunications companies — feeling skittish, in a market growing this fast, there’s room for plenty of products. Manufacturers just have to prove to consumers that they have something to offer for their price point.

Smartphone makers have much higher returns on each device sold compared to less advanced phones, and there are a lot of entrants into the market to get in on that racket. In the case of the Droid — and its commericals — positioning itself as a competitor to the iPhone simply puts it in the same market.

When Verizon ads talk down the iPhone with phrases like “iDon’t have a real keyboard,” or “iDon’t run simultaneous apps,” they are actually saying that the Droid is on the same plane as the iPhone.

In the past year, Google has released several iterations of its Android. None have caught on with the general populace, but the company is hoping this one will.

And the initial response is positive. The Droid has gotten its fair share of good press. And the device is most important for Motorola. Google has plenty of business diversification in case its smartphone efforts don’t pan out. And as much as Verizon may be willing to run ads slamming the iPhone, executives are chomping at the bit to get their hands on the device in 2010.

Meanwhile, Motorola has nowhere to go but up. The company’s wireless revenues in the last quarter fell 46% to $1.7 billion during
the period and its market share dropped to a mere 4.7%.

Avi
Greengart, research director for consumer devices at Current
Analysis, talked to The New York Times about what this device means for Motorola:

“To be
able to come out with a sexy flagship device that is getting so
much promotion from Verizon and really shows off their hardware skills
— it looks like their bet on Android is going to pay off. If they
hadn’t delivered something like this, they’d be out of business.”

And its the CEO of cellphone maker HTC who got most to the heart of the smartphone business in an interview with Forbes this week. For the last six months, HTC was the only manufacturer of Google’s Android phones. But Peter Chou is not scared of the competition. He tells Forbes:

“You cannot expect you are the only player in town.
… You need other players to come and make the ecosystem stronger.”

Photo: Verizon