Verizon Wireless plans next month to start selling Droid X, the latest phone from Motorola Inc based on Google Inc's Android software.

The move comes as all three companies try to keep pace in the intensely competitive smartphone market, which this week will see Apple Inc roll out its much-anticipated iPhone 4 on five continents.

Verizon Wireless, the biggest U.S. mobile provider, said the Droid X phone will go on sale July 15 for $199.99 after a $100 rebate to customers signing a two-year contract.

The Droid X has a 4.3 inch touch-screen and an 8 megapixel camera, according to Verizon Wireless, which already depends on Motorola's Android phone as a key weapon in competing against AT&T Inc, the exclusive U.S. provider for iPhone.

But Current Analysis analyst Avi Greengart noted that as well as battling iPhone, the latest Motorola phone will also have to fight for prominence on Verizon Wireless store shelves against HTC Corp's popular Droid Incredible.

This won't dissuade somebody who wants an iPhone 4 but it will keep customers who want to stay with Verizon Wireless happy, said Greengart.

Verizon Wireless Chief Marketing Officer John Stratton said the company would kick off a very major marketing campaign to support the Droid X.

We think this is going to be a terrific product, Stratton said, noting that his goal would be for the phone to sell faster than the first Droid which quickly sold 1 million units when it went on sale over the holiday shopping season late in 2010.

While AT&T recently ended an unlimited data download service offering, Verizon Wireless is hoping to stay competitive by keeping a $29.99 a month unlimited data download service for Droid X customers.

However, Stratton said his company would turn to usage-based data pricing in the not too hugely distant future. He said that a usage based model is the right model in order to ensure that a small number of bandwidth hogging customers do not strain the network.

The operator is already starting to limit data downloads for customers who use the Droid X as a hotspot to connect up to five devices at a time using its short-range Wi-Fi connection.

Verizon Wireless will charge $20 a month extra for this service with a data download limit of 2 gigabytes after which every megabyte downloaded would cost 5 cents, implying a $50 surcharge for every additional gigabyte downloaded.

Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc, also announced on Wednesday that any customers coming to the end of their contract in 2010 would be able to immediately upgrade to any smartphone, including the Droid X.

Motorola and Verizon Wireless hope the phone stands out in particular for its multimedia capability due to the relatively large screen and a high definition video player.

The Droid X allows consumers to rent and buy movies from Blockbuster Inc to watch on the phone. Movies cost $9.99 to purchase and $3.99 to rent using the Wi-Fi network. Unlike iPhone 4, the Droid X will support Adobe Flash.

Motorola Co-Chief Executive Sanjay Jha said he sees the device selling well despite the disproportionate amount of attention the iPhone launch has attracted.

There's a meaningful amount of traction we can get through the Summer period, he said in an interview.

Jha said he was seeing some tightness of supply of components such as chips and phone screens but said he is comfortable the company would meet demand for the Droid X.

For its part, Google's Android system has been gaining some ground on iPhone in the last year. Google's head of engineering Andy Rubin said at the Droid X phone launch that about 160,000 Android phones were being sold every day.

(Reporting by Sinead Carew; editing by Gerald E. McCormick, Bernard Orr)