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Phone to combine Intel, Microsoft design

The first mobile phone jointly designed by the two giants is set to hit European markets this fall. The phone will play music and video, send e-mail, snap pictures and keep a diary.

The first mobile phone jointly designed by Microsoft and Intel is set to hit the market this fall.

Mitac, a Taiwan-based computer maker expanding into handheld devices, is showing off new model 8380 on its Mio site. Mio is Mitac's brand name.

It is touted as the first mobile phone to use a chipset from Intel, the world's largest chipmaker. It will also use Microsoft's Smartphone 2002 operating system.

Intel, like Microsoft, has identified the mobile phone industry as an opportunity outside the slow-growing PC market.

The phone is based on a reference design from Intel and Microsoft that was first presented in early 2002. Along with its ability to make voice calls, it will play music and video, send e-mail, snap pictures and keep a diary. This design, announced at the world's largest mobile trade show in Cannes, France, sent shockwaves through the industry as many feared the two tech giants could commoditize mobile phone technology in the same way they've done with personal computers, where the duo dominate in key operating software and chips.

Established handset makers were reluctant to work with the new players, forcing Microsoft and Intel to first team up with Asian contract manufacturers like Mitac and High Tech Computer, which are eager to get into the new business.

Recently, Reuters reported that the No. 2 global handset maker Motorola will launch a Microsoft phone later this year.

According to Mitac's Web site the clamshell phone will come out in Europe by the end of the third quarter, although industry sources said it would more likely be the start of the fourth quarter. It will cost between $565 and $598 (500 euros and 530 euros) before subsidies. Several European mobile operators are expected to offer it to consumers.

Story Copyright  © 2003 Reuters Limited.  All rights reserved.