June 3 (Bloomberg) -- Toshiba Corp., Japan's largest maker of laptop computers, plans to introduce a model that uses methanol for power instead of a battery by the end of the year.

``We believe it will be the first'' laptop computer to use such a power source, Ruta Takeishi, a manager in Toshiba's European electronics division, said at a battery industry conference in Paris. It will initially be available only in Japan, he said.

The so-called micro fuel cell is one of a new class of energy storage devices under development by Tokyo-based Toshiba and other battery makers, as well as companies focusing on the technology, such as Mechanical Technology Inc.'s MTI MicroFuel Cells unit in Albany, New York.

The Toshiba micro fuel cell will last about 10 hours, or about twice as long as most new rechargeable lithium-ion batteries currently available. Lithium-ion batteries account for about $2.7 billion of the $4.5 billion market for rechargeable batteries, according to Paris-based market research firm Avicenne Developpement.

New Sources

Computer manufacturers and mobile phone makers such as Motorola and Nokia Oyj are searching for more potent sources of energy as portable devices grow increasingly power-hungry.

The Toshiba laptop will initially be more expensive than a battery-powered model, Takeishi said. He declined to be more specific. The cost should fall to the equivalent of models powered by lithium-ion batteries by 2007, he said.

Fuel cells are different from traditional batteries because they generate electricity by consuming fuel rather than by storing electricity and releasing it through a chemical reaction. Once the fuel is exhausted it can be replenished by replacing a cartridge or refilling a reservoir -- an operation that can take just seconds rather than the hours sometimes needed to recharge a battery.

The worldwide market for replacement cartridges is likely to grow to $1 billion a year by 2010, outstripping the projected market for micro fuel cells by 10 times, according to Avicenne Developpement.

The potential use of micro fuel cells to power mobile devices will be limited for several years because of regulatory restrictions on transporting them on aircraft, Takeishi said.

Toshiba in April said it would shift more than half of its personal computer production overseas to restore the business to profitability in the fiscal year ending March 2005. Toshiba, the maker of the Tecra, Portege and Satellite models, now makes about 30 percent of its notebooks overseas.

To contact the reporter on this story: Zimri Smith in London at zsmith@bloomberg.net.

Last Updated: June 3, 2004 12:22 EDT