China Mobile's holy grail of handsets is slated for sale next month, a phone that uses both the carrier's own mobile operating system and China's next-generation cellular standard.

Lenovo Mobile next month aims to release China's first 3G "Ophone," the name for handsets with the China Mobile operating system, a Lenovo Mobile representative said today.

The handset will support TD-SCDMA (Time Division Synchronous Code Division Multiple Access), a domestically developed 3G standard that the government has tapped China Mobile to promote and market.

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The Lenovo phone, called the O1, will be the first to use both technologies, according to the company. It will also add a sleeker 3G phone to China Mobile's offerings, combating the lack of attractive handsets that analysts say has helped keep down adoption of TD-SCDMA.

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China Lenovo Ophone mobile

The Lenovo Web sites promoting the phone play either trance techno beats or smooth acoustic tunes to back up pictures of the black handset, which displays applications in iPhone-like bubble squares on its 3.5-inch touchscreen.

At the end of July a Chinese news Web site posted pictures (see top picture above) that it claims show the iPhone model being tested for release in China, adding to expectations that the Apple phone will launch there soon.

The pictures showed an iPhone with simplified Chinese characters in its display and inscribed on the back of the handset.

Apple has held months of talks with China Unicom, one of the country's state-owned mobile carriers, on offering the iPhone in China. In a sign that the two could be approaching a deal, Apple last month submitted an iPhone to Chinese regulatory authorities for tests to obtain a network access licence, according to analysts.

The iPhone in the pictures had "China Unicom 3G" displayed beside the signal strength meter on its screen. The back of the handset was inscribed with the letters WCDMA (Wideband Code Division Multiple Access), the 3G standard being promoted by China Unicom.

A China Unicom spokeswoman said the company is still in talks with Apple but has not reached any formal agreement on the iPhone. An Apple spokeswoman declined to comment.

Apple said in April that it hoped to start iPhone sales in China within the next year.

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China Unicom may launch the iPhone at the end of September to coincide with the expansion of its 3G coverage to 280 cities, investment bank China International Capital Corporation said in a research note this month.

"There is essentially no longer any doubt about the introduction of the iPhone," the report said.

The iPhone is already very popular among fashion-conscious urban Chinese, who bring the handsets back from abroad or buy smuggled or fake versions at local electronics markets.

China Mobile, the world's largest carrier, needs the boost to its 3G service. Fewer than 3 percent of its new subscribers signed up for TD-SCDMA during the first five months of the year, according to a China Mobile filing with the U.S. Securities and Exchange Commission.

Limited network coverage is another reason for the slow adoption, said Liu Ning, an analyst at BDA, a telecoms research company in Beijing. Expanding coverage and a growing number of handsets will help the carrier, but it still faces a challenge in reaching government targets for the growth of TD-SCDMA, he said.

China Mobile is competing with the country's two other state-run operators, China Unicom and China Telecom, to attract 3G users.

The carrier will need time to level the playing field with its rivals, said Liu. The China Unicom and China Telecom networks use more established 3G standards, which gives them access to handsets popular abroad. China Unicom, for example, is in talks with Apple to offer the iPhone.

"It's a hard task for China Mobile," Liu said.

China Mobile has sought to speed the growth of TD-SCDMA by subsidizing companies that design components and handsets for the standard, said Liu. Dopod, the China distributor for Taiwan's High Tech Computer (HTC), received 46 million yuan (US$6.7 million) from China Mobile to develop phones that support the standard, a company representative said.

Six handset makers are developing TD-SCDMA phones this year, according to the carrier.

China Mobile is also widely expected to launch its Mobile Market application store this month or next month. The store's Web site on Friday displayed the message, "About to launch, please anticipate."

The download store will offer applications for platforms including OMS (Open Mobile System), the in-house China Mobile operating system based on Google's Android. The OS comes pre-installed with proprietary applications from China Mobile, such as its instant messaging client and mobile mail service.

China Mobile did not immediately reply to a request for comment.