|
Microsoft nets Ericsson
|
 |
December 8, 1999: 4:36 p.m. ET
Swedish firm adopts Internet Explorer as browser for new cellular phones
|
NEW YORK (CNNfn) - Microsoft Corp. signed up Swedish mobile phone maker Ericsson as a strategic partner Wednesday in an effort to boost the company’s bid to place its software in the next generation of mobile phones.
Ericsson, the world’s third-largest mobile manufacturer, agreed to adopt Microsoft‘s (MSFT) Mobile Explorer "microbrowser” - a modified version of the company’s Web browser -- for use in its new generation of cell phones, which will provide users with access to a host of Internet services.
Some analysts, however, downplayed the significance of the agreement, largely because it does not include use of Microsoft’s Windows CE, which the company has had a difficult time in making the standard operating system for a variety of hand-held devices.
Microsoft and Ericsson also will form a joint company to market and deliver mobile e-mail solutions for network operators. Ericsson will hold a majority stake in the new firm.
Investors considered the deal a blow to British palmtop computer maker Psion, which made a splash last year with its EPOC operating system, developed in collaboration with the largest cellular phone makers.
Microsoft has been seeking to lure major cellular operators away from EPOC, which was developed by Symbian -- a joint venture involving Psion, Ericsson and the Swedish company’s mobile phone rivals Nokia, Motorola (MOT) and Japan’s Matsushita.
Psion shares dropped 368 pence to close at 2638 on the London Stock Exchange.
Microsoft shares fell 1-1/4 to close at 91-3/4. Shares of Ericsson (ERICY) American depositary receipts jumped 5-7/16 to 64-1/8.
Some analysts said equipment providers were now looking to provide a range of products with more than one platform.
"It would be daft for them to just lock in to the EPOC platform,” said Justine Hayes, cellular analyst at consultant The Yankee Group.
Room for two?
Company officials were quick to point out, however, that their partnership doesn’t include Microsoft’s Windows CE operating system.
Jan Uddenfeldt, Ericsson’s senior vice president of technology, said the company will maintain its relationship with Symbian and its EPOC platform.
With the Microsoft deal, Uddenfeldt said, "We are getting a Web browser that can be run on top of the existing operating system.”
But David Heger, an analyst at A.G. Edwards, said the agreement does little to change the landscape of the cell phone market, especially in light of the fact that Ericsson’s handset sales pale in comparison to those of Motorola and Nokia.
Ericsson holds a 10 percent market share - down from 12.6 percent at the beginning of the year -- compared to Nokia’s 32-percent share and Motorola’s 22-percent hold.
One analyst noted that by licensing a mobile version of its Web browser instead of Windows CE, Microsoft is feeling its way into a market that is expected to outstrip sales of PCs.
"Microsoft cannot impose its standards on the mobile phone industry because the mobile phone industry is not interested in its operating system," Keith Woolcock, IT analyst at Nomura
in London, told Reuters news agency. "So Microsoft can either walk away or address a
mobile phone industry that will be roughly three times the size of the personal computer industry."
Where does Windows CE fit in?
Microsoft has faced criticism for being slow to enter the market for Internet access by cell phones. Although Wednesday’s deal doesn’t provide a boost to Windows CE, the company plans to use it as a springboard to broader applications for the operating system.
"Although this deal is very phone-focused, much of the infrastructure that the joint company will be building will be very applicable to the palm-sized PC marketplace,” said Bob Muglia, vice president of Microsoft’s business productivity group.
Muglia also dismissed the notion that Microsoft is backing away from pushing Windows CE, which has struggled to gain widespread acceptance, as a platform for consumer devices.
"We’re still heavily investing in CE,” he said. "We recognize that there are different classes of devices ... that you still want to get at Internet information and e-mail. For those devices, Mobile Internet Explorer is a better use of their capabilities.”
Symbian’s woes
Vendors were attracted to Symbian because the EPOC software has been developed from scratch for small, hand-held devices and already has enjoyed commercial success with Philips cellular products.
However, Symbian has not had an easy time developing products to meet the specifications of all four cellular partners. Some analysts expressed disappointment at the lack of progress displayed by Symbian at Telecom 99, a trade show for communications technology earlier this year. The new EPOC-based devices are scheduled for release early next year.
Some observers also doubt the viability of vendors opting for Symbian and Microsoft platforms at the same time.
Nonetheless, Ericsson officials maintained that their company will have no problem supporting both platforms.
Meanwhile, Muglia pointed out that Microsoft has no intentions of joining the Symbian venture, noting that the company considers Symbian a competitor in the operating system market.
The companies expect mobile phones equipped with Microsoft’s Mobile Explorer microbrowser to be available in early 2001.
As the industry scrambles to offer high-speed Internet access on a variety of consumer devices, Heger of A.G. Edwards said investors can expect more deals involving cell phone providers and Internet and software firms.
"It’s symbolic of what’s going on in the industry,” he said. "Mobile has gone from just being a voice medium to being a data implementation.” 
|
|
|
|
|
|
Ericsson
Psion
Microsoft
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
