Microsoft Demos PC, Cell Phone Combo

Microsoft is currently developing a new cell phone operating system that it would market as low-cost computing alternative in developing nations. Called FonePlus, the current iteration of the product is essentially the WebTV platform running on a mobile phone.

In developing markets, PCs are too expensive for most people. In turn, the mobile phone is increasingly becoming a method to access the Internet. Microsoft's FonePlus, essentially a low-cost PDA, would be able to access the Web, e-mail and multimedia, while also providing productivity applications similar to PocketOffice.

With the $100 laptop gaining momentum, such a device may be Microsoft's answer. Both Microsoft and Intel have criticized the device, saying it lacks the necessary features to be truly useful. However, up until now, the Redmond company had not produced any alternative to the project.

In demonstrations at the company's annual financial analysts meeting Thursday, Chief Research and Strategy Officer Craig Mundie highlighted various functions of the device, and said it could be the first computer for many. "It's hard to distinguish this from a computer" when using its applications, he told attendees.

The FonePlus device marks yet another move by Microsoft to expand itself into developing markets. The company already released Windows XP Starter Edition, and has developed software to run Internet kiosks. Additionally, its "FlexGo" program allows those who cannot afford to purchase a computer upfront to pay off the balance through a per-hour usage structure.

No release date or expected pricing has been set for FonePlus.