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Microsoft Phone Software Gets Lift Focus on E-Mail Users Helps Company Against Bigger Rivals

Posted on: Monday, 13 February 2006, 12:00 CST

By Victoria Shannon

Three years after entering the arena for mobile phone software, Microsoft executives say they have overcome early challenges and are reaching cruising speed in the business.

As one measure of that, Steve Ballmer, chief executive of Microsoft, will for the first time give a keynote speech here this week at 3GSM World Congress, an annual cellphone conference that is expected to draw more than 50,000 people this year.

Other measures are more material: Microsoft phone software is in handheld wireless devices made by 47 manufacturers and sold by more than 100 mobile carriers in 55 countries. In its most recent quarter, Microsoft said, its wireless division showed a 70 percent increase in licensing and its first profit.

On Monday, Microsoft is expected to announce that a fresh wave of European carriers including Vodafone, the largest have licensed its mobile e-mail software, one of the fastest-growing and most competitive areas of the cellphone world today. The U.S. operators Cingular, Sprint and Verizon also are signing on, as is Chunghwa of Taiwan.

Hewlett-Packard is also expected to introduce the third in its Mobile Messenger series of phones, the iPaq HW6900, which will be based on Microsoft software and come packed with five different wireless technologies, including Wi-Fi to link into short-range newtworks.

But Microsoft is far from dominating the business, as it is used to doing in personal computer and office software. While its mobile operating system runs about five million of the world's high-end wireless phones, that is only about 4 percent of the market for so- called smartphones, according to market figures from the third quarter of last year. The British company Symbian still dominates, mostly on the strength of its software in consumer smartphones, which make up 80 percent of the market. "They need some heavy hitters on their side," Nick Jones, senior European analyst at Gartner, the technology consulting firm, said of Microsoft. "They are represented by a lot of manufacturers and carriers, but not in any particular volume."

Microsoft sees its mobile niche as the discrete segment of high- end portable gadgets that are both cellular phone and miniature office, with the ability to send and receive e-mail, access the Internet and edit business documents.

"You'll hear Steve talk about these 400 million Outlook and Office customers we have and we say, 'They all carry a phone, let's make that a Windows Mobile phone,'" said Scott Horn, general manager of Microsoft's mobile division. "That's the number we look at."

But Jones said smartphones are still stuck in a niche corporate market. "They have a good message for the corporate market," he said. "It's just that that's not most of the market."

Horn agreed that Microsoft could go further, saying: "We think there's a lot more to do, a lot more growth opportunity. But this is going to be a big, big business for the company. When you talk to Steve and Bill about it, they view this as a long-term business investment, like Xbox. The strategy bet we made a couple of years ago we're really executing on that."

At the 3GSM show, the first to be held outside of Cannes, which organizers said the industry had outgrown after 15 years, some of the limelight will be on phones as mobile multimedia gadgets. But the overall tone of the conference, Jones said, will be less flashy and centered on "solid business growth."

Source: International Herald Tribune

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