Microsoft has unveiled its first prototype (made by LG) smartphone running Windows Phone 7. Facing rigorous competition from Android and iPhone OS (not to mention RIM and Symbian), Microsoft announced Windows Phone 7 a few weeks ago and has since chosen to rename and relaunch further development of Windows Mobile 6.5 as “Windows Phone Starter Edition.”


The LG prototype has a 5 megapixel camera with flash and meets Microsoft’s chassis guidelines, including three buttons, 800 x 480 or larger touchscreen, and a powerful CPU. LG’s QWERTY phone resembles the eXpo and will be polished for final release this holiday.