Motorola Inc said on Thursday that it would launch a new phone based on Microsoft Corp software and that No. 3 U.S. mobile operator Sprint Nextel Corp will sell the phone to corporate customers.

While Motorola uses Google Inc's Android software for its consumer cellphones, it is sticking with Microsoft's technology for devices aimed at business customers.

Motorola said at an event to unveil the ES400 device that the phone will go on sale in September and will run on Microsoft's Window's Mobile 6.5 software.

Microsoft, which has been losing out to Android in the software market for consumer phones, said it is planning an upgraded version of the Windows Mobile 6.5 software for businesses later this year.

This will be branded as Windows Embedded Handheld.

Motorola plans to upgrade the ES400 phones to the next version, a spokesman for the company said without giving a timeline for the upgrade.

Next year Microsoft will launch a new version of Windows Embedded Handheld based on its Windows 7 software, according to Chief Executive Steve Ballmer who made a statement via video at the Motorola event.

(Reporting by Sinead Carew; Editing by Phil Berlowitz)

Steve Ballmer Motorola Microsoft Sprint