Skype launches first mobile internet phone

Skype has entered the highly competitive mobile phone market today, with the launch of the first mobile handset to enable free calls over the internet.

In collaboration with mobile phone group 3, the voice over internet protocol (VoIP) group has developed the Skypephone, a 3G internet phone with built in Skype which can also be used to make normal calls and to access 3's internet services.

The 3 Skypephone is set to go on sale in the UK on November 2, for £49.99 on a pay-as-you-go 3 tariff – or free on a contract.

Michael van Swaaji, acting chief executive at Skype, said: "Skype has now taken a giant step forward in the mobile arena. It takes an innovative operator like 3 to challenge traditional thinking and offer the kind of product other operators are still shying away from."

The Skypephone was developed with the help of Qualcomm and its BREW platform, which enables Skype to work with core handset features such as address book and messaging.

Earlier this month, Skype launched its internet calls service on social networking site MySpace in a bid to grow its number of active users.

Skype's owner, the online auctioneer eBay, paid $4.3bn for Skype in 2003, hoping for rapid growth of Skype's active user base.

Although Skype currently has 246 million registered users across the globe, eBay recently admitted that it had overpaid for the company – after reporting a $1.39bn (£700m) write-off that pushed the group to a loss of $935m for the third quarter.

The phone also boasts a 2-megapixel camera, mp3 player, and mobile television functionality.