Microsoft covers wireless bet with Nextel investment
I AM NOT SAYING TODAY'S RELEASE AS TO DO WITH EITHER OF THESE FOLKS, JUST TO HIGHLIGHT WHAT IS GOING ON IN THE MARKET... FOR WIRELESS..
TOO MUCH TO LOSE TO NOT BET FOR THESE BIG GUYS
SEATTLE, May 10 (Reuters) - Microsoft Corp. took out its ample checkbook again Monday, underscoring the message that the world's leading software company wants to be everywhere that matters in the emerging world of high-speed communications.
Microsoft's $600 million investment in Nextel Communications Inc. marks its biggest move to date in the wireless arena, following a two-year binge of spending on cable companies that culminated last week in $5 billion alliance with AT&T Corp.
''Microsoft has got so much money and so much at stake they can't afford to miss anything,'' said Bruce Kasrel, a senior analyst at Forrester Research. ''Anything that has to do with technology, they want to be there.''
He and other analysts said Microsoft's financial returns may be modest in the short term compared with its lucrative business in computer operating systems and applications.
But with a $22 billion cash hoard, Microsoft can afford to place a lot of bets, and in any case the company has shown itself to be an astute investor, making hundreds of millions of dollars of paper profits on its cable stocks, for example.
''One way to make sure you're in the winner's circle at the end of the race is to bet on every horse,'' said analyst Rob Enderle of Giga Information Group. ''For them it's much more important to be in the winner's circle than just to pick the winning horse.''
Microsoft made an initial foray into the digital wireless space last year, starting a joint venture with cellular telephone maker Qualcomm Inc. aimed at expanding availability of information over computer modems, cellular telephones and other hand-held appliances.
Such services, which are unproven and pose significant technical hurdles, are expected to appeal to a niche audience of business people who travel extensively and need access to the Internet or corporate data from a variety of locations.
Brad Chase, vice president of Microsoft's consumer and commerce group, said he expected more alliances to be announced in the future in both wired and wireless communications.
''At the broadest level what we're trying to achieve is to help contribute to building the next generation of information and application services,'' he said. ''We are investing in a broad range of communication areas to help bootstrap that.''
In addition to driving new demand for Microsoft back-end server software, the Redmond, Wash.-based company aims to get more viewers for its MSN.com Internet portal, which is being customized for the smaller screens of wireless devices.
Internet rivals America Online Inc. and Yahoo! Inc. have announce similar efforts.
''Basically everyone is trying to cover all their bases,'' said analyst Zia Daniell Widger of Jupiter Communications.
The research firm estimates that by 2003 about 9 percent of households with access to the Internet will reach online destinations solely through telephones, game consoles or other non-computer devices.
''We still feel PCs are going to be the dominant device,'' she said.
But Kasrel pointed out that Microsoft was caught unaware by the sudden explosive growth of the Internet and had to spend heavily to maintain its dominant market position.
''They're determined not to let that happen again,'' he said. ''They can afford to throw money at a lot of things and say, let's see what works.''
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