Baidu, China's search engine goliath, has announced the launch of its first low-cost mobile phone.

This is the firm's first step into the fast-moving and hugely lucrative smartphone market.

Manufactured by Foxconn, the low-end Changhong H5018 is powered by Baidu's own operating system Cloud.

Analysts have suggested it is hugely important for the search company to secure a presence in the booming mobile industry in China, which currently has the largest number of smartphone owners in the world.

The phone will be the first device to run on Baidu's Cloud terminal platform and will come with 100GB of cloud storage.

With a price tag of less than 1,000 yuan (£99), the device will face fierce competition in the Chinese low-end market.

"It's a terrific market opportunity for us, and Baidu is constantly adjusting, understanding what users are interested in," director of international communications at the firm Kaiser Kuo commented.

Posted by Simon Thomas

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