T-Mobile will begin selling a smart phone in Europe running Microsoft's Windows Mobile software for less than €99 (£68) when purchased with a service contract.

Dubbed a Smart Digital Assistant (SDA), the tri-band phone starts selling in Germany in early October, with plans to roll it out in other European countries where T-Mobile operates such as the UK, the Netherlands, Hungary, the Czech Republic and Austria.

The phone will probably be launched in the USA as well, although that decision has not yet been finalised, Azrak said.

This is the first time T-Mobile has launched a smart phone running Microsoft software and it comes as the software company is looking to establish itself more firmly in the mobile market. Partnerships with large European operators are seen as particularly important, given the popularity of the Symbian mobile operating system in the region.

Motorola and Orange also offer Windows-based smart phones in Europe, but the SDA is the most affordable, according to T-Mobile. "At below €100, this is one of the most affordable phones with the properties of a smart phone and a Pocket PC," a spokesperson said.

The SDA includes a built-in camera and Bluetooth, weighs 100g and boasts a 65,000-color screen. The battery lasts for 240 minutes of talk time, or 200 hours on standby, and the phone supports a memory card.

The Windows Mobile software offers users calendar, Microsoft Word, Excel and PowerPoint functions, has a PDF (Portable Document Format) reader and syncs with Outlook e-mail.