Praised for its readability in “difficult” lighting conditions and for its battery saving potential, but criticized for lag and inability to display colors, the E Ink display technology has been heavily used on e-book readers during the past few years, including on Amazon’s highly successful Kindle line.

But if you ever wondered how would an E Ink smartphone look like, we have some answers for you today. In short, it looks pretty cool yet kind of quirky, exciting, but limited.

It doesn’t really help that the first manufacturer to give this kind of “project” a try is not a very well-known name in the tech industry – Onyx International – but let’s keep an open mind and check out the prototype of the world’s first ever E Ink phone.

The unnamed handheld stars in a seven-minute long YouTube video clip that mostly shows off its number one ace up its sleeve – legibility in bright light. In order to do that, YouTube user “Charbax” puts the device next to a Galaxy Nexus outdoor in the middle of a sunny day, so as to get an idea of how much easier it is to use a phone with an E Ink screen instead of one sporting an AMOLED display.

The differences are major, but, while the clip’s author states that the GNex is set at maximum brightness, it doesn’t look that way to us. Still, you can’t challenge the prototype phone on this, so moving on.

I mentioned power saving as another major upside of using E Ink displays, and, while we can’t be certain of this phone’s exact real life autonomy at the moment, we should expect at least one full week between charges. Needless to say that such a battery life would be totally awesome in a pond where even the bigger fishes can only dream of swimming for one or two full days before needing a rest.

Now for the downers. The phone’s spec sheet is mostly kept under wraps, but, based on rumors and what we can tell from the clip, it will run Android 2.3 Gingerbread and feature an ARM Cortex A5 processor (most likely a Qualcomm MSM7227A).

Those are some laughable features, but what’s worse is that not even good ol’ Gingerbread doesn’t seem to be running smoothly on the phone. The lag is painful in several instances of the video demonstration, and, while most of the bugs and glitches are probably due to this being an unfinished prototype, we shouldn’t get our hopes up.

Hearing that the device could weigh only about 70 grams doesn’t make up for that either, so it’s time to face reality. Could an E Ink phone be useful in real life if it proves so clunky and doesn’t let users watch videos, play cool games or do anything else that involves color? Are you willing to sacrifice all that just for readability and awesome battery life? Check out the full video and then let us know.