Microsoft, Qualcomm in wireless deal
Companies create venture to boost data traffic
By Jeffry Bartash, CBS MarketWatch
Last Update: 5:26 PM ET Nov 10, 1998NewsWatch
REDMOND, Wash. (CBS.MW) -- Microsoft and Qualcomm said Tuesday they are creating a joint venture aimed at expanding the uses of cellular phones to handle data traffic, e-mail and Internet browsing for corporate clients.
While data is quickly becoming the dominant and most lucrative form of traffic over regular phone networks -- surpassing old-fashioned voice calls -- barely any data at all travels over wireless networks.
"We think now is the time: The time for wireless and the Internet to merger together," said Qualcomm chief executive Irwin Jacobs in a conference call.
The new San Diego-based venture, called wirelessKnowledge LLC, has lined up companies such as AT&T Corp. (T), AirTouch Communications Inc. (ATI), Bell Atlantic Corp. (BEL), BellSouth Corp. (BLS), GTE Corp. (GTE), Sprint PCS and U S West Inc. (USW) to work with the venture.
Those companies will offer wireless service based on the joint venture's technology to their customers. Initial rollout of the service is expected in April, executives said.
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Companies like Qualcomm (QCOM), a maker of wireless phones based on its proprietary CDMA standard, want to sell equipment that will boost the ability of individuals and companies to send data over wireless networks. For its part, Microsoft (MSFT) hopes its Windows CE software will become the application for phones andother equipment designed for data traffic.
Qualcomm's stock rose 1/4 to 56 7/8. Microsoft shares rose 1 3/8 to 112 1/16.
The Qualcomm-Microsoft venture comes shortly after the formation of Symbian, a wireless-phone alliance that includes Motorola Inc. (MOT), Ericsson (ERICY) of Sweden and Nokia (NOK.A) of Finland. Symbian plans to develop wireless phones based on an operating system of Britain's Psion PLC.
The goal is to enable laptop computer users to connect reliably and speedily to corporate computer networks over cellular or other wireless systems, while at the same time providing tip-top security. Previously, companies have been concerned about lax security and the slow speed and frequent cutoffs of data transmission over wireless networks.
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The alliance with Microsoft likely will give Qualcomm a boost. The scrappy San Diego telecommunications pioneer is struggling to gain acceptance for its code division multiple access digital cellular standard, while sales of its phones have sagged amid the economic slump in Asia. If the venture succeeds, that could sharply boost sales of Qualcomm wireless equipment.
Qualcomm, however, said that its equipment designed for wireless data transmission will also work with competiing standards, such as GSM and TDMA, which now dominate.
"We want to see it (the new service) accepted as soon as possible," Jacobs said. Still, he said, "we're not forgetting about CDMA," asserting that it's better suited for wireless data transmission than other standards and could eventually become the dominant platform.
Microsoft, meanwhile, is trying to head off the challenge from Psion in the market for software to run devices such as wireless phones, handheld computers, consumer electronics, set-top boxes and the like.
Ironically, one of Microsoft's longtime allies, Motorola, hooked up with the Symbian alliance, spurning offers from Microsoft to create their own venture, The Wall Street Journal reported last week. Motorola apparently was worried about Microsoft capturing a toehold in another high-tech sector. |
