The new G2 myTouch smartphone

announced Monday

by

T-Mobile

might have its physical shortcomings, but it still manages to put

Google's

(GOOG) - Get Report

Android system in a good light.

The 3G

HTC

phone is the second Android-based device for

Deutsche Telekom's

(DT) - Get Report

T-Mobile, only this time around it lost its physical keyboard. Less phone, more money -- the phone available in black, white and "merlot" will start selling in "early August" for $199, $50 more than the G1.

T-Mobile says the thinner myTouch is targeted to a less techie crowd, presumably that means a less texting and typing dependent customers, and more for the general consumer. A T-Mobile representative also added that the G1, with the slide out keypad, will continue to be available.

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The bad news for T-Mobile is that myTouch will go head to head with the now cheaper $99

Apple

(AAPL) - Get Report

iPhone, a heavyweight champ with some 20 million units already sold.

What's impressive with the myTouch, however, is its software. G2 owners can customize the images and application icons on the screen to their taste. In a market teeming with big-screen smartphones, the vanity plate approach might help the G2 stand out a bit.

But that's just the superficial. The new Android 1.5 version operating system is the brain where the real G2 beauty lies.

Google has become a critical smartphone application, and the G2 helps showcase some the mobile Google power at the user's fingertips.

For example, T-Mobile used Sherpa, a points-of-interest software that gathers different categories of stores, banks, restaurants or other sites in your vicinity. And if you show a preference over time for a particular store, the program will note that by putting that choice at the top of your lists.

The service combines Google search, Google maps, GPS location and the Sherpa directory manager to give users some useful information on the go.

This isn't a huge breakthrough since Apple's iPhone Google maps and search application as well, but it advances the Android system ever so slightly.

Google hopes to duplicate its desktop success on the mobile phone, and Android is proving to be a viable beachhead in hostile smartphone territory. Next up:

Motorola's

(MOT)

version of the Android.