Is This The Start?
From the November 15, 1999, issue of Wireless Week
Microsoft Decision Stays Confined
By Monica Alleven
Harsh words by U.S. District Judge Thomas Penfield Jackson in the government's controversial antitrust case against Microsoft
barely fazed technology-related wireless stocks--or the software giant itself.
Microsoft's stock rebounded in heavy trading last Monday after Jackson blasted the software maker in his findings of fact, saying
the company has monopoly power and tried to use its dominance in the personal computer industry to stifle competition. His
comments appeared to have little spillover effect on wireless companies that do business with Microsoft. But it did raise renewed
questions about antitrust concerns for Microsoft partner Qualcomm Inc., whose ascent to the top hasn't been totally dissimilar to
Microsoft's.
Some analysts say they expected little or no effect on wireless stocks from the long-winded Microsoft case because the firm still
is considered a bit player in wireless. Microsoft gradually has made inroads in wireless through various deals with Nextel
Communications Inc., British Telecommunications plc and, most recently, Teligent Inc. But the deal that garnered the most
publicity, its Wireless Knowledge LLC venture with Qualcomm, has yet to emerge with a commercial service for businesses since
it launched a year ago.
Meanwhile, competitors have criticized Qualcomm for its hard-line negotiations and fierce defense of intellectual property rights.
Qualcomm's technology is at the core of CDMA products, and as the standard grows throughout the world and third-generation
CDMA-based technologies emerge, Qualcomm is likely to make loads of money on fees and royalties. In the computer industry,
competitors also accused Microsoft of using bullying tactics to take over the operating systems market.
So when the decision on Microsoft was announced, it was not surprising to see antitrust considerations on the minds of some
Qualcomm investors, including the "Quillionaires" who've made a bundle off Qualcomm's stock this year. A Qualcomm
spokeswoman was unavailable for comment, but many "Qualcommite" investors communicating on Internet message boards were
confident the chip maker wouldn't run into any problems. "If the highly successful CDMA technology achieves industry standard
status approaching that of Microsoft's Windows, then QCOM may have to face antitrust considerations," writes "vanya_k" on a
Yahoo! board. "Remember, the MSFT Window OS was never awarded the luxury of multicontinental licensing rights as was
QCOM."
Other industry insiders were glad to see Microsoft publicly reprimanded, particularly those who have long feared the company
would take over the wireless data industry. In fact, Microsoft's inability to firmly penetrate the wireless market is, in part, a result
of industry players keeping their doors less than wide open, says Andrew Cole, a principal at the Renaissance Worldwide
consulting firm. Both wireless carriers and manufacturers whisper fears that Microsoft will step in and take away their business.
But that's not the only reason the firm has failed to command a large leadership position in wireless. The company "came to the
market with a certain arrogance about [its] ability," soon learning wireless data delivery was not as easy as originally perceived,
Cole says.
Still, smaller wireless companies are finding it doesn't hurt to hook up with Microsoft--as long as the computer software giant's
ownership is limited. The mood was upbeat last week at Teligent, which just the week prior had landed $200 million in financing
from Microsoft and an estimated 4.5 percent ownership by the company. Teligent executives already are talking about ways to
expand their relationship with Microsoft, from joint marketing to operational partnering. "We're delighted with Microsoft's decision
to invest in Teligent," says Teligent spokesman Robert Stewart.
As long as Microsoft shares its wealth and keeps a lid on its ownership stakes, smaller wireless companies are likely to welcome
the brand name for years to come--whether it's pieces of Microsoft or the whole thing.
|
