Microsoft and Qualcomm to hold hands on smart phones

Only days after it waded into the smartcard market, and unveiled an embedded version of NT 4.0, Microsoft is gearing up to announce a new joint venture with Qualcomm that will develop smart phones based on Qualcomm's CDMA wireless technology. Microsoft's Windows CE has been considered too large for use in phones and handheld devices, but the company is working on a 'slimmed down version' of Windows CE for the mobile phone market, according to one analyst. The new venture seems aimed at Symbian, the smart phone company announced in June by Nokia, Ericsson and Psion.

SAN FRANCISCO (11/04/98) - Microsoft Corp. and Qualcomm Corp. are preparing to announce next week the formation of a new company that will develop smart phones based on Qualcomm's CDMA (Code Division Multiple Access) wireless technology, sources close to the companies confirmed.

A Qualcomm spokeswoman confirmed that the two companies would be announcing a new company at an event in Redmond, Washington, on Tuesday. She declined to elaborate and Microsoft spokespeople did not immediately return a call seeking comment.

Microsoft's Windows CE operating system has been considered too large for use in phones and handheld devices, analysts said. But Microsoft is working on a "slimmed down version" of Windows CE for the mobile phone market, according to an analyst who asked not to be identified.

In June, Nokia., L.M. Ericsson Telephone and Psion announced the formation of a new company, Symbian, to develop Psion's Epoc 32 operating system and license it to manufacturers of smart phones and handheld communicators. Motorola became a Symbian shareholder last month.

"Symbian took the tack that they were trying to kill any CE threat (threat from CE) before it came along," said Jill House, an analyst with International Data. But "Windows CE is kind of behind and there are questions as to whether it is small enough to go into a phone ... it eats up space and battery life."

Earlier this year Qualcomm announced it was licensing 3Com's Palm Computing operating system and in September said it was testing its pdQ smart phone running the Palm OS that offers Internet and email access, as well as access to scheduling and productivity applications.

However, the Palm technology is a "transitional move" for Qualcomm, according to the anonymous analyst. Qualcomm and Microsoft's announcement may be more of a "complete solution" than just offering Windows CE on CDMA phones, he said.

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