UPDATE 3-Microsoft launches new phone software

* Launches Windows Mobile 6.5

* Looks to take on Apple, BlackBerry devices

* CEO says no plans for Microsoft-branded phone

* Shares up 2.1 percent.
(Adds CEO comment, share price, adds PARIS to dateline)

By Bill Rigby and Leila Abboud

SEATTLE/PARIS, Oct 6 (Reuters) - Microsoft Corp (MSFT.O)
introduced new software for mobile phones on Tuesday, promising
a range of devices to compete with Apple Inc's (AAPL.O) iPhone
and Research in Motion Ltd's (RIM.TO) BlackBerry.

The world's largest software company, in partnership with
phone makers and phone companies such as Samsung Electronics Co
Ltd (005930.KS), AT&T Inc (T.N) and Vodafone Group Plc (VOD.L),
said more than 30 new devices with the new Windows Mobile 6.5
software would be on the market in more than 20 countries by
the end of the year.

The new phones can play music, open Word and Excel
documents, and be synchronized over the Internet. But some
analysts worry that the new software is not enough of a leap to
keep up with rivals. [ID:nN05387476]

Investors generally welcomed the launch, sending Microsoft's
shares up 2.1 percent on the New York Stock Exchange, in a
broadly higher market.

Microsoft Chief Executive Steve Ballmer played down recent
industry talk that the company was developing its own
smartphone.

"We are not here to announce today that we are making
phones," he said at an event in Paris.

The market for phones is set to treble or quadruple in the
next few years, Ballmer said, and Microsoft is ready to
challenge other phone makers for market share.

He added that Windows Mobile's share of the mobile phone
market is equal to Apple's.

"We and Apple are neck and neck and we're chasing the two
other players," Ballmer said, referring to Nokia (NOK1V.HE),
the world's No. 1 smartphone maker, and Research in Motion.

Microsoft has no plans to counter Google Inc's (GOOG.O)
move into the smartphone market with its free Android software,
according to Ballmer.

"Free is not a business model," he said. "We are a
commercial company, we will look to gain revenue and profit
from our activities. You'll have to ask our competitors if
they'll make money on free things."

Microsoft also announced a new online application store,
where users can buy 246 applications for their phones.
(Reporting by Bill Rigby and Leila Abboud, editing by Derek
Caney and Matthew Lewis)