Microsoft Fails to Win Over
Major Mobile-Phone Makers
19.02.01
y David Pringle
Staff Reporter of The Wall Street Journal
LONDON -- Having failed to persuade leading mobile-phone makers to use its operating system, Microsoft Corp. is trying to loosen their grip on the handset market.
The software giant is expected to announce Monday that lower-ranking manufacturers Mitsubishi Corp. of Japan and Sendo PLC of the United Kingdom have agreed to use Microsoft's Stinger operating system in their handsets. Samsung Electronics Co. of South Korea already uses the Redmond, Washington-based firm's software, which controls the operations of mobile phones.
Microsoft also plans to announce that four mobile-phone operators -- Vodafone Group PLC, Telefonica SA, T-Mobil, a unit of Deutsche Telekom AG, and Telstra Corp. of Australia -- are beginning to test handsets running Stinger. These operators could begin selling these handsets to consumers before the end of the year, according to Richard Lindh, a senior director for Microsoft in Europe.
Microsoft and Sendo plan to offer the operators customized phones that would carry the operator's own brand. By contrast, most of the leading handset makers, such as Nokia, make standard phones that always carry the manufacturer's brand.
There is some dual branding in Europe now. For example, some handsets in the U.K. carry the brand of mobile-phone operator Orange in addition to that of the handset manufacturer. But Microsoft's offer goes one step further in that only the operator's brand would be displayed. "There is not going to be the splash screen with the Microsoft flag coming up," said Mr. Lindh in an interview last week. This is a significant departure from Microsoft's strategy for its other products.
He added that Microsoft isn't powerful enough to dictate terms to mobile-phone operators. "Our market share in the phone industry is very low," he said.
If operators do decide to buy tailor-made phones, that would spell bad news for leading handset makers such as Nokia Corp. and Siemens AG, which have spent hundreds of millions of euros developing their own consumer brands. But Microsoft and its handset partners believe that they will gain a bigger share of the $107 billion (117.09 billion euros) mobile-phone market at the expense of the top tier of handset makers by allowing the mobile-phone operator to display its brand on the handset.
The U.S. company plans to show prototypes of phones using the Stinger software at the GSM World Congress in Cannes this week. Though the handsets will have large color screens, Mr. Lindh said they will weigh 110 grams and allow four and a half hours of talk time, similar to today's monochrome phones.
Microsoft's new customization strategy could pay off, according to some experts. Neil Ward-Dutton, a principal consultant at London-based research group Ovum, said that as the leading operators become multinational they are gaining more sway over handset suppliers. "They can now say, 'I want 10 million phones. Are you going to make it like this or not?' " he said. Japan's leading mobile-phone operator, NTT DoCoMo , has been buying tailor-made phones for its network for several years.
If Microsoft gains a stronger position in the mobile-phone industry, Mr. Ward-Dutton predicted that the company will probably try to reinstate its brand in the operating system at a later date. Microsoft has said that it would assess its position with regard to each individual operator.
Microsoft's hardware partners for Stinger have less than 10% of the global handset market. Although Sendo makes phones for U.K. operator Virgin Mobile, the two-year-old British handset maker is still largely unproven in the marketplace.
In fact, Microsoft is locked out of the upper echelons of the mobile-phone market: Four of the top five mobile-phone makers -- Nokia, Motorola Inc., Telefon AB L.M. Ericsson and Matsushita Electric Industrial Co. -- are developing a rival operating system for mobile phones, called Pearl, through the Symbian Ltd. software consortium based in London. Microsoft and Symbian are in a heated race to bring their rival operating systems to market first.
The leading handset makers are hoping that Symbian will allow them to retain control over the software inside the handsets, in addition the hardware. Nokia, in particular, has already extended its brand beyond the handset itself by adding distinctive software features -- including its popular "snake" game -- to its phones. Nokia is confident that operators will continue to sell Nokia's popular phones because consumers will demand them. "Our brand benefits the operator," said Tapio Hedman, a spokesman for the company, in a recent interview.
Meanwhile, Siemens, the fourth-ranked manufacturer, is using its own operating system in an attempt to differentiate its phones from those of rivals. Siemens has just launched an 80 million euro advertising campaign to strengthen its brand in the European and Asian mobile-phone markets.
Write to David Pringle at david.pringle@wsj.com
Smartphones ahoy
Symbian signs Siemens; Microsoft gets in on the act
By Madeleine Acey, FTMarketWatch
Last Update: 10:25 AM ET Feb 19, 2001
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LONDON (FTMW) - The battle for market dominance in Internet-enabled mobile phone software intensified on Monday as the Symbian consortium squared-up against Microsoft at the GSM World Congress, in Cannes in the South of France.
Symbian-leader Psion (PON: news, msgs) said German electronics group Siemens (723610: news, msgs) would use the consortium's operating system to run its smartphones. Psion shares rose on the news. See story.
The Symbian alliance, which includes mobile phone makers Nokia (000053994: news, msgs)
(NOK: news, msgs) , Ericsson (: news, msgs) (000010865: news, msgs) , Motorola (MOT: news, msgs) and Panasonic (MC: news, msgs) , aims to build computing functions into mobile phones.
Its operating system software EPOC rivals those of Microsoft (MSFT: news, msgs) , Palm (PALM: news, msgs) and others that hope to dominate the mobile communications arena as it merges with computing technology.
Symbian is seen as providing future promise for Psion. Psion, which issued a profit warning in January (see story), holds little world market share as a palmtop computer maker. It is seen as having lost ground to the likes of U.S. rival Palm (see MarketPulse). But it has gained four of the world's top mobile phone makers as shareholders in its software off-shoot Symbian and is fast forming other partnerships for its technology.
To have Siemens - the world's fourth largest mobile phone maker and a non-Symbian member - on board as a licensee is likely to be seen as a vote of confidence for the Symbian software.
But analyst Steve Brazier at technology market research firm Canalys said such deals needed to be backed up by product delivery.
Where's the beef?
"Any announcement like that is very good news for Symbian, there's no two ways about it," Brazier said.
But he warned that Symbian watchers shouldn't get too excited about it just yet.
"The proof of the pudding is when they launch products. What Symbian is really lacking against competitors Palm OS and Microsoft PocketPC is products. They have a development base today."
Microsoft eyes year-end launch
But Microsoft is not so fast off the block.
The U.S. software behemoth announced on Monday that its smartphone software Stinger would be available in phones by the end of the year. It said networks Telstra (TLS: news, msgs) , Vodafone (VOD: news, msgs) (VOD: news, msgs) and T-Mobil (555750: news, msgs) would trial the phones' services and phone makers Samsung (SSNGY: news, msgs) and Mitsubishi (MIELY: news, msgs) would build the software into phones.
It said the phones would incorporate e-mail, diaries and access to corporate computer networks among other things.
The Ericsson R380 phone, launched late last year using the Symbian operating system already provides most of these services.
Siemens
Brazier added that Siemens was one of the best performers in the mobile phone market in the last 12 months over which period the company had been transformed from an "also-ran" into a significant player.
"This agreement... is very exciting news for our customers," said Peter Zapf, president of Siemens Mobile Phones. "The Symbian platform allows us to continue the development of our smartphone portfolio, not only to business users, but to all mobile phone consumers that want the world's best mobile business and entertainment features on their handsets."
Siemens shares fell 0.39 percent to €142.05
Symbian chief executive Colly Myers said, "Siemens is internationally recognized as a leading player in the mobile phone industry and has a wealth of consumer experience and marketing knowledge which will be of great value to this partnership."
Technology partnerships
Psion has used its specialist experience in making software for small, handheld personal digital assistants to drive computing software in mobile phones. Rival Palm has a competing small operating system but the larger likes of Microsoft from the desktop computer world are trying to gain a foothold in the palm-top software market with cut-down versions of their operating systems.
Brazier said there was one advantage in approaching the market in this way. It would give them a stake in handheld computers that were phone-enabled. Rather than the phones that were computer-enabled. "By mid-way through this year, it won't be possible to distinguish between the two" types of products, he said.
Meanwhile Symbian is slowly gaining ground in other areas. Symbian partner Ericsson has announced a deal with computing pioneer IBM (IBM: news, msgs) to develop financial services software for mobile phones. And Psion announced last week it had agreed to supply NEC Computers (NIPNY: news, msgs) with its Bluetooth software that allows different computing and communications devices to swap information wirelessly (see story).
For more on Germany see FTMarketWatch.de |
