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Russian double-sided smartphone has global ambitions

By Maria Kiselyova

MOSCOW (Reuters) - Russian modem developer Yota Devices has launched its first smartphone, hoping its novel double-sided screen will allow it to break into foreign markets although analysts doubt it will gain a sizeable share from established rivals.

Yota has been developing the phone since 2010. On Wednesday, it was presented to Prime Minister Dmitry Medvedev, a lover of modern gadgets, who suggested the novelty had made iPhone maker Apple "strain", Russian news agencies reported.

Oil-rich Russia is a major market for foreign handset makers such as Apple and Samsung Electronics, but it has so far not been successful in designing handsets.

Moscow-based Yota Devices plans to sell the phone in 20 countries next year after making its 2013 debut in Russia, Austria, France, Germany and Spain, Chief Executive Vlad Martynov told Reuters.

"If we really hit the mark, we'll be happy because in two to three years everyone will be copying us," he said, referring to the success of Apple's iPhones since their launch in 2007. He has no plans now to launch in the competitive U.S. market.

Analysts however were skeptical, predicting Yota will struggle to emulate the success of the iPhone or Samsung's Galaxy smartphone.

"In people's minds Yota Devices is a no-name company, it's not Samsung or Nokia or Apple, which all have their fans. No one will be expecting a YotaPhone," said Denis Kuskov, analyst at research firm TelecomDaily.

"At best, the sales will be limited to several tens of thousands in 2014. The company is focused on developing one model and big production costs clearly won't be covered."

The phone, based on Google's Android mobile operating system, will be available for 19,990 roubles ($600) in Russian stores against a price of around 29,000 roubles ($870) for Apple's iPhone 5c with the same memory.

In Europe and the United Arab Emirates the YotaPhone will be available for 499 euros ($680) and $600 respectively. The company has teamed up with distributors Ingram Micro Inc and Brodos for international sales, it said.

NEW NAME

Assembled in China from components made in Japan and Taiwan, the YotaPhone features a backlit liquid crystal display (LCD) screen on one side and, on the other, an electronic paper display designed to mimic the appearance of ordinary ink on paper, which is always switched on.

"It's a new type of gadget. With smartphones it's always one problem - its display is always black, it always sleeps, which we think is fundamentally wrong," Martynov said in an interview, pointing at the smartphone's front screen.

The LCD screen is used for calls and other traditional functions, while the electronic paper screen can stream social media, text messages, maps, weather and breaking news and also works as an e-book.

Carolina Milanesi, research vice president at Gartner, said she expected small sales volumes for now but did not rule out that the technology would be picked up by other handset makers.

"Yota certainly has a new approach to smartphones and they not only are trying to look different but to solve an issue many consumers have when it comes to managing battery life and constant notifications," said Milanesi.

"The big question will be how much consumers are prepared to pay for that different approach and how much they will bet on a new name."

Yota has received about 10,000 pre-orders via its online store, mostly from Russia, Martynov said. He declined to predict sales but said the company hoped that approaching New Year and Christmas holidays would help.

Sales of smartphones in Russia exceeded sales of mobile phones for the first time in November, Russia's top phone retailer Euroset said last week. In monetary terms, smartphones accounted for 85 percent of the market, it added.

Yota Devices, majority owned by Russian investment fund Wooden Fish, was spun off from wireless internet provider Yota, also known as Scartel, in 2011, ahead of a deal that saw Russia's No. 2 mobile operator Megafon buy Scartel for $1.2 billion. ($1 = 33.2487 Russian roubles) ($1 = 0.7377 euros)

(Additional reporting by Anastasia Teterevleva; Editing by Megan Davies and Mark Heinrich)

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