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Microsoft shows off cell phone-PC prototype

Software maker is looking at whether it can build a cheap PC for emerging markets by combining a cell phone and a TV.

REDMOND, Wash.--Microsoft on Thursday showed a prototype of a cell phone-based computer that could one day find a use as a cheap PC for emerging markets.

The FonePlus device, shown off here by Chief Research and Strategy Officer Craig Mundie, stems from discussions that began at the World Economic Forum in January. To create the computer, Microsoft combined its Windows CE operating system with a phone that could then be connected to a television display and a keyboard.

"Many people, including us, have been looking at different ways to lower the cost" of computing, Mundie said. "Clearly one of the things that is just booming globally is the use of the cell phone."

Microsoft has come under some fire for not being more aggressive in helping to create a low-cost PC that is suitable for emerging markets. Mundie said that even in poorer countries, many people today have both a telephone and a television, making a computer based on those components easier to achieve than creating a low-cost PC.

"Could this be your first computer? And if it was, what could you do with it?" Mundie asked. He demonstrated word processing, multimedia playback and Web browsing using scaled-down versions of Internet Explorer, Word and Windows Media Player. "For at least simplified applications, it's harder to distinguish this from a computer," he said.

The software maker has not yet committed to building such a product. "We're going to look at what it would take us to bring this to market," Mundie said.

In addition to its phone-computing research efforts, Microsoft also has its pay-as-you-go FlexGo program for emerging countries. The program doesn't actually lower the cost of a PC, but makes it available for a lower cost upfront: It allows people to put half the cost of a PC down and then pay off the remainder via a per-hour usage charge, over time.

The company is also testing its Windows XP Starter Edition, a slimmed-down version of the desktop OS that is sold in some emerging markets on new, low-cost PCs. Reported sales for Starter Edition have been modest. Microsoft said at last year's analyst meeting that it had sold 100,000 copies of the operating system.