Cheap Phones, powered by Microsoft

Having won only minor traction with some of the larger phone makers, Microsoft is choosing another tact – cheap phones made by original equipment makers. The company made the announcement this morning at the 3GSM Congress, and said that it will be working with Flextronics, to develop a low-cost GSM/GPRS phone which can be brought to market quickly and be re-branded by all comers. The new platform is called Peabody, and can be used to customize the phones depending on the orders.

“That’s the significance of this partnership — extremely high-volume, low-cost devices that don’t have any concessions in terms of functionality,” John Starkweather, product manager at Microsoft’s mobile devices division told The Associated Press. Microsoft is trying hard to get a toehold in the wireless market, and despite its best efforts it has had limited success. Wireless is crucial area of growth for the company which is finding core “PC” business moving slower than me after a night of single-malt binge.