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AT&T plumps for Windows-based handset

The wireless carrier plans to start selling a Motorola smart phone powered by Windows Mobile software, a lift to Microsoft as it tries to gain a foothold in the phone market.

AT&T Wireless is picking up a Motorola smart phone powered by Windows software, a lift to Microsoft as it tries to gain a foothold in the phone market.

The cellular carrier plans to announce Monday that it will begin selling Motorola MPx200 handsets in the United States by the end of the year. Motorola and Microsoft jointly developed the handset, which uses the Windows Mobile operating system for smart phones, according to Microsoft.

The smart phone is expected to debut in Europe next month through carrier Orange, with the U.S. launch following in the fourth quarter. It will use GSM (Global System for Mobile Communications)/ GPRS (General Packet Radio Service) cellular networks.

Microsoft and Motorola are expected to work together to market the phone and to encourage developers to create applications for the device.

After a series of fits and starts, Microsoft has gradually positioned itself to become a player in the smart phone market. Unlike cell phones in general, smart phones haven't developed into a major market, although they have shown some promise. Smart phones allow cellular subscribers to surf the Internet and have access to e-mail, as well as to make voice calls.

With the addition of Motorola, Microsoft has gained its highest profile handset partner to date.

Windows Mobile software's chief nemesis is Symbian, a smart phone operating system owned by cell phone titans Nokia, Siemens, Panasonic, Samsung and Sony Ericsson, among others. Britain-based Symbian has the leading share of the smart phone operating system market. Motorola recently unloaded its 19 percent stake in Symbian, in a move that gave it more freedom to work with developers of other operating systems.

Worldwide handset shipments in the second quarter this year grew 19.2 percent to 118.3 million units, compared with the same period a year ago, as phone makers added features such as built-in cameras and color displays, according to research firm IDC.

In the overall market, about 2 million of the handsets shipped in the second quarter were smart phones, to claim 1.7 percent of the market. Nokia was the leader in smart phones, with 1.2 million units shipped. Sony Ericsson was in second place, with 200,000 units shipped.

In the overall cell phone market, Motorola holds the No. 2 position.

Motorola isn't exclusively tied to Microsoft; in February, the Schaumburg, Ill.-based company announced its first Linux-powered handset, which uses Java technology. The company said at the time that the Linux operating system would serve as a "key pillar of its handset software strategy."

However, Motorola and Microsoft will work on a series of smart phone and wireless devices targeting mobile professionals, the companies are expected to announce Monday.

AT&T Wireless and Microsoft, both based in Redmond, Wash., are partners through an agreement made last year where the companies said their efforts will encompass three broad areas: getting Microsoft software onto new devices, simplifying access to corporate information over wireless devices and enabling location-based services.

CNET's Ben Charny contributed to this report.