Microsoft Takes IPhone Challenge - Plans $100 Phones

Microsoft, the world's largest software maker, competes with Apple and Symbian Ltd. in developing phones that handle e- mail and surf the Internet. More consumers are buying such devices, called smart phones, which had been the domain of corporate customers. As competition grows, Microsoft is cutting prices to appeal to a broader range of shoppers.

Microsoft designs the phones' operating system, while its partners build the hardware and sell the devices. The software is a smaller version of Microsoft's Windows system, which runs most personal computers.

Apple's iPhone, which debuted in June, is a $399 device with a touch screen. The phone combines Apple's iPod media player with Internet functions.