The latest version of Lenovo's flagship handset, which will be priced at 2,899 yuan ($433), is based on Code Division Multiple Access (CDMA) 2000 technology that China Telecom adopted in its 3G network.

The new product includes several hardware and software updates, such as an enhanced digital camera and several pre-installed applications, compared with the first version that Lenovo launched with China Unicom in May.

Lu Yan, president of Lenovo Mobile, Lenovo's cell phone subsidiary, said he was confident that the company would be able to achieve its goal of selling over 1 million LePhones by May next year. He estimated that about 60 percent of the units would be sold to consumers, and the rest to corporate users.

The new LePhone launch came three days after Apple Inc on Saturday kicked off the iPhone 4 in the China market, retailing the 16-gigabyte model for 4,999 yuan and the 32-gigabyte model for 5,999 yuan.

The product debut attracted thousands of Chinese fans, who lined up in front of Apple stores in Beijing and Shanghai to snap up the device.

Sales of the LePhone could surpass that of the iPhone in China as it provided more localized services and applications, Lu said.

Over 700 applications are already available on the LePhone platform, with the number estimated to cross 1,000 by the end of this year, he said.

Lenovo launched the Android-based smartphone in May as part of efforts to explore a new growth engine after its traditional computer business was affected by growing sales of smartphones, netbooks and tablet computers.

Yang Yuanqing, chief executive of Lenovo Group, said earlier this year that it had sold over 100,000 LePhones in the first 45 days since the product launch. He expected mobile Internet products to account for 10 to 20 percent of Lenovo's revenue in the next five years.

Lenovo said on Tuesday that the new LePhone would be sold through Lenovo's own personal computer sales channels as well as China Telecom's 6,000 stores across the country.

Revenue from mobile devices has contributed 3.5 percent to Lenovo's total in the first fiscal quarter ended July, the company reported.

Since the LePhone launch, Lenovo has gained 12 percent in China's premium cell phone market (sale price over 2,000 yuan), following Apple, Motorola, HTC and Samsung, according to figures from research firm GFK China.

By the end of July, the number of 3G users in China reached 28.08 million, according to statistics from the Ministry of Industry and Information Technology.

Ma Daojie, China Telecom's mobile business general manager, said on Tuesday that smartphones retailing for under 3,000 yuan will see explosive growth in China in the next few years.