Orange, the France Telecom-owned European mobile network, announced Friday it is to launch a new-generation phone running on Microsoft’s Smartphone 2002 software.

Manufactured by High-Tech Computer Corporation of Taiwan, the new gizmo will be launched in the UK before the end of this month, giving Microsoft the beachhead it desperately needs to establish itself in the global telecoms market. A full European rollout is likely to follow.

The software effectively converts the humble mobile phone into a miniature computer able to surf the internet, play videoclips and run other applications.

Nothing new about this, of course. Similar phones from Nokia, Ericsson and Motorola are already on the market – having spurned the software colossus for fear its eyewatering software licence fees would make too substantial an incursion into their profits.

But there are two key differences with Smartphone 2002 – price and portability – which Microsoft hopes will transform it into a serious competitor in the marketplace. Other phones running similar software (such as Microsoft’s own PocketPC) are not only more expensive but too heavy, bulky, and cannot be used single-handed.

Orange is giving nothing away as to price save that it will be pitched “well below” competitive devices. Nonetheless, Microsoft will find itself in a business environment erased from its corporate memory banks since the late 1980s – a dark horse competing among the favorites.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff