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Ericsson chases market share
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December 9, 1999: 11:17 a.m. ET
Mobile firm’s boss sees Microsoft deal delivering ‘competitive advantage’
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LONDON (CNNfn) - Sweden's Ericsson, scrambling to regain market share from Finnish mobile-phone rival Nokia, is pinning high hopes on its new tie-up with software supremo Microsoft to develop Web browsers and e-mail for the next generation of handheld devices, Ericsson President Kurt Hellstrom told CNNfn Thursday.
Hellstrom, speaking from Stockholm, said the collaboration with the Seattle software giant will breathe new life into Ericsson’s mobile handset business. It’s a welcome piece of good news for his company, whose image has suffered this year amid two profit warnings, a sluggish restructuring, and the recent ouster of its chief executive.
The accord gives Ericsson prized access to Microsoft's mobile browser, a commodity that may help resuscitate the Swedish company's share of mobile handsets, which is expected to fall to 12 or 13 percent this year from 15 percent in 1998.
"This is going to create a competitive advantage," Hellstrom told CNNfn's World Business Today. "Whether that is enough to recover lost market share, I don't know, but we have other measures."
Hellstrom said he expects products from the partnership to begin hitting store shelves in the second half of next year. Shares in the Swedish company, the world's third-largest mobile phone maker after Nokia and U.S.-based Motorola (MOT), dropped Thursday, giving up part of the 12 percent gain they posted the previous day after the agreement was announced. The stock was down 6.4 percent at 514 Swedish crowns in afternoon trade.
Both partners to benefit
Analysts said the collaboration with Microsoft (MSFT), unveiled Wednesday, offers both parties a golden opportunity to address perceived glitches in their business strategies.
For Microsoft, the link provides a means of introducing its software applications into the growing market for handheld devices, which has so far been largely unreceptive to its overtures.
Offering a glimpse into its thinking, Microsoft said Thursday that it sees the possibility for further collaboration with Ericsson beyond the current venture.
The U.S. company has not ruled out forming alliances with other companies in developing technologies for mobile applications.
Microsoft has tried - to little avail - to secure a foothold for its Windows CE operating system in a mobile-device market that is expected to supplant the personal computer as the most used gateway to the Internet in the next few years.
One reason for the cold shoulder to Microsoft, analysts say, is that the world's biggest mobile players - Nokia, Ericsson, Motorola, Panasonic and Matsushita - joined forces in the Symbian joint venture several years back to develop what is emerging as the operating system of choice for mobile devices of the future: EPOC.
Committed to Symbian
Ericsson insisted this week that the Microsoft deal will not lessen its commitment to the Symbian partnership. Hellstrom said Ericsson would use Microsoft's Windows CE operating system on some of its cheaper handsets, while the EPOC platform will be reserved for its more costly products.
He said this decision was governed by pragmatism.
"Today, the EPOC operating system is the only one that is really adapted to mobility," Hellstrom said.
A Symbian official said Wednesday that he doesn't necessarily see the Ericsson-Microsoft venture as a threat. Symbian partners already had licensing agreements with several high-profile software firms, including Sun and Oracle, to provide applications for the EPOC operating system, he said.
"When it comes to applications, we're trying to encourage a lot of different types of devices," the official said. "In our platform, we already have a number of applications that we've created. We allow licensees to add in their own applications." 
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