There's no getting away from comparisons to Apple's iPhone 3G these days, so here it is: the HTC Touch Diamond was built as a follow up to the HTC Touch, launched last year as a Windows Mobile-based competitor for the original iPhone. UPDATE: HTC Touch Diamond P3700 with CoPilot Live 7.0 review, August 18 2008.

The HTC Touch Diamond is also a 3G handset, made with a touchscreen, 4GB of storage for music and photos and more. It's an elegant follow-up to the HTC Touch and should give the 3G iPhone a run for its money, so long as HTC is able to work with service providers to lower the price of the handsets.

And in Taiwan, HTC has done just that. The company announced Thursday a plan to sell the Touch Diamond for around £50 with certain 3G contracts from Chunghwa Telecom, the island's largest mobile phone service provider. That's a dramatic price decrease from the original £400 or so price HTC talked about earlier.

The price also beats the £99 price tag on the iPhone 3G with 8GB of flash memory storage, which won't be available in Taiwan when it's launched today. As long as HTC is able to work out more such deals with mobile phone service providers around the world, it should do well against the new iPhone.

The best part of the HTC Touch Diamond by far is its beautiful craftsmanship, but the touchscreen and functionality come in a close second and third. The handset is sleeker and smaller than the iPhone at 102mm in height by 51mm wide by 11.33 mm thick. The iPhone 3G, which sports a 3.5in inch screen with 480-by-320 pixel resolution, is 115.5mm by 62.1mm by 12.3mm.

The back of the HTC Touch Diamond has diamond contours that drew "oohs" and "aahhs" of praise whenever we showed it to people. Even for people who don't want to buy one, you should have a look at the design.

One problem with the HTC Touch Diamond's black exterior, as with many gadgets that have a glossy finish, is that it holds fingerprints. Handle the phone for a few minutes and you have to wipe it off before you show it again. And with a handset built for touch navigation, that's an issue.

The 2.8in touchscreen dominates the front of the HTC Touch Diamond and the 640-by-480 pixel display resolution is beautiful. We've never seen nicer screen quality on a phone. You can even see it well in direct sunlight because the screen auto-adjusts for different lighting conditions.

The company's TouchFLO 3D software makes it relatively simple to use but we had to read the instruction manual to get the hang of it. A lot of the movements start with your finger in the middle of the screen. So if you want to scroll up, for example, you put your finger in the middle of the screen and flip upwards. At first we had tried swiping a finger up the entire screen, but that didn't work well. Once we got it, though, it was easy.

The 3D view of the HTC Touch Diamond's software is excellent. You can look through your contact list by picture with the sweep of a finger if you add pictures to people in your contact list, or take their picture with the phone's 3.2Mp auto-focus camera. For music listeners, the album covers show up so you can flip through them in the same way you look through the contact list. Of course, you can type in names as well by hand or stylus.

The HTC Touch Diamond uses Microsoft Windows Mobile 6.1 as its OS and its a nice program, easy to use, and familiar to people who use Microsoft on their PCs.

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