UPDATE 1-Russia's Sistema unveils first GLONASS mobile device

* Sistema CEO presents device to PM Putin

* Sistema plans to launch the device in March (Adds quotes, details, background)

NOVO-OGARYOVO, Russia, Dec 28 (Reuters) - Russian company Sistema SSAq.L unveiled on Tuesday the country's first mobile device equipped with the GLONASS navigation chip promising to start sales in two months.

The state has spent more than $2 billion in the last decade on developing the GLONASS system seen as a potential rival to the U.S. global positioning system (GPS). Russia hopes the project will spark a domestic technology revolution.

“You are holding in your hands the world’s first telephone with a chip able to communicate with both GLONASS and GPS,” Sistema CEO Vladimir Yevtushenkov told Prime Minister Vladimir Putin.

The chip was developed by Sistema's subsidiary Sitronics SITR.RTS jointly with state technology corporation Rosnano. Yevtushenkov said the sales will start on March 1 when the company expects to produce 500,000 GLONASS-enabled devices.

Putin, who personally spearheaded the GLONASS project acting as a salesman for the system on international visits, joked in response, proposing to postpone the launch until March 8, the International Women’s Day, still widely celebrated in Russia.

“Let’s launch it on March 8 to make a present for women. So that they could know where their husbands are, identify their position precisely on the map,” Putin said.

The project suffered a major setback this month when three GLONASS navigation satellites plunged into the Pacific Ocean after a rocket launch went wrong. Russia currently has 20 satellites of the needed 24 to complete the system.

“We launched European satellites successfully but crashed our own ... The system would have been more reliable if we did not lose the three satellites,” Putin said. Russian Space Agency aims to complete the satellite network in March.

Russia plans to introduce duties of around 25 percent by 2012 on the import of mobile phones without the GLONASS navigation system, as part of efforts to encourage worldwide adoption of the technology.

In August, the head of the state GLONASS operator, said firms such as Nokia NOK1V.HE, Motorola MOT.N and Qualcomm QCOM.O were in talks with Russian chip manufacturers about the mass production of handheld devices enabled with both GLONASS and GPS. [ID:nLDE67A0JC]. (Writing by Gleb Bryanski)