BenQ or Acer are in the box seat to snare a global contract to produce a sub $300 PDA phone for Microsoft.

The move is part of a plan by Microsoft to expand its share of the global OS (operating system) market for mobile devices, according to sources at Taiwan makers and vendors. Microsoft has already exchanged ideas about the potential project with its major partners in Taiwan, including High Tech Computer (HTC), Quanta Computer, Asustek Computer, Acer, Mitac International, and BenQ, with both BenQ and Acer being the prefered two suppliers. Most Taiwan makers generally support Microsoft’s plan to optimise its mobile operating system, but they said there still is a long way to go before the software vendor and local handset makers can jointly bring down overall production costs for PDA phones.

Jack Tong, president of own-brand handset vendor Dopod International, said that it is difficult for makers to drastically cut down their costs as the production of PDAs and smartphones can hardly reach a suitable economy of scale.

With consumers demanding more functions from PDA phones, it would probably take two years for makers to be able to roll out sub $300 PDA phones, contended Hwang Shan-rong, chairman of Taiwan-based PDA phone maker E-Ten Information Systems.