MS phone software gets boost with Motorola deal

FRAMINGHAM (09/15/2003) - Motorola Inc. and Microsoft Corp. this week will announce plans to cooperate on the development of cellular phones based on the Windows Mobile 2003 operating system, with mobile carriers in the U.S., Europe and Asia due to start selling the devices next month.

Schaumburg, Ill.-based Motorola is aiming the first of the so-called smart phones that will result from its new partnership with Microsoft directly at corporate applications involving mobile end users, said Michael Tatelman, vice president of Motorola's mobile products group.

AT&T Wireless Services Inc. in Redmond, Wash., has agreed to sell the MPx200 smart phone in the U.S., and London-based Orange SA will offer it to users in the U.K., Tatelman said. He added that other carriers in Europe and in Hong Kong also plan to make the phone available to their subscribers.

Ken Pasley, director of wireless systems development at FedEx Corp. in Memphis, said he's not surprised that Motorola and Microsoft have teamed up to develop smart phones. FedEx last year started deploying to its couriers a handheld computer called the PowerPad that is made by Motorola and based on the Pocket PC operating system, which Microsoft has rebranded as Windows Mobile 2003. Pasley said he views Windows-powered phones as a logical extension for the two vendors.

The announcement with Motorola ups the stakes in the battle between Microsoft and London-based Symbian Ltd. for dominance in the mobile phone operating system market, said Sam Bhavnani, an analyst at ARS Inc. in La Jolla, Calif. Symbian is backed by a consortium of mobile phone makers, including Nokia Corp., Psion PLC and Sony Ericsson Mobile Communications AB.

Illustrating the competitive wrangling that's taking place, the deal between Microsoft and Motorola was disclosed just two weeks after Motorola, which helped found Symbian five years ago, abruptly backed out of the ownership consortium and sold its interest to Nokia and Psion.

Bhavnani called the Motorola deal "a huge win" for Microsoft and said the agreement helps legitimize Windows Mobile 2003, which was released in June. But Symbian and Nokia remain the clear leaders in the worldwide mobile phone market, he added.

Gartner Inc. predicted that Nokia will account for about 34 percent of worldwide mobile phone shipments this year and that Motorola will be in second place, with a 14 percent share.

Motorola will continue to sell phones based on Symbian's software, but Tatelman said the use of Windows Mobile 2003 will let the company develop "office-centric" phones for corporate users. He noted that the MPx200 device will let mobile workers synchronize phone-based e-mail, calendar and contact databases with back-end Microsoft Office and Outlook systems. The phone also includes 32MB of internal storage space and an optional 1GB Secure Digital card.

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