Read this:
-- =SMARTMONEY DAILY SCREEN: Nextel Fills Wireless Screen --
By Alec Appelbaum
Smartmoney.com
This story was originally published Tuesday.
NEW YORK (Dow Jones)--Give the corporate deal-cutters at Microsoft (MSFT)
credit. They've had a sharp eye for technologies whose appeal spreads from the
lab to all sorts of business settings, until companies of all kinds can't
imagine working without them. Microsoft produced variations on established
user-friendly interfaces, Internet browsers, spreadsheets and word processors
and became a market leader in all of them. Now it has paid $600 million for 4%
of wireless communications provider Nextel (NXTL) as it tries to establish an
early lead in wireless Web surfing.
What's really going on here goes beyond a single deal - and beyond the
prospect that a company like MCI WorldCom (WCOM) will make a fresh bid for
Nextel now that it includes a shot of Windows fluid. Monday's deal represents
the largest of several bets being spread across all communications devices, in
hopes that Internet access will make them more habit-forming. Nextel will start
selling phones this summer featuring "Nextel Online," a portal-like interface
that uses the Microsoft Network format to deliver weather reports, sports scores
and other simple text messages.
It may not seem like much, but a familiar user interface on a wireless device,
as long as it works, could be a huge advantage to early players in the field. If
the growth of the Internet itself is any indication, the customers for wireless
Net access seem sure to follow. And if the wired Internet is any guide, being
first to market can mean all the difference.
Despite what you might suspect, demand for wireless data exceeds a cluster of
geeks and specialists. As companies keep decentralizing, corporate travelers
will pay premium prices for the ability to check e-mail, the weather, news or
stock quotes. In turn, phone companies will keep building digital data-friendly
networks that can transmit simple Internet messages as quickly and cheaply as
voice. Nextel looks poised to become a better-performing stock thanks to t he
Microsoft deal, with greater access to user interface technology and the
incalculable advantage of being able to perfect its products while the market is
still relatively small.
The audience Microsoft and others pursue will probably be different from the
early buyers of wireless Internet gadgets, says Dataquest analyst Matt Hoffman.
But Microsoft's easy-to-use technology and marketing muscle will probably help
independent sales agents persuade small businesses to pay up for wireless
Internet a ccess, boosting Nextel's sales.
Behind Nextel, the competition for wireless Internet sales is already getting
thick. Qualcomm (QCOM) makes the PDQ phone and supplies gear for U S West (USW)
and Bell Atlantic (BEL); Nokia (NOK) also outfits Bell Atlantic. France's
Alcatel (ALA) announced U S West's Web-ready 'thin phone" Monday. AT&T (T)
clucks about its "Terminator," an all-digital mobile phone it has begun to sell
to high-end customers. 3Com (COMS), which planted the wireless access seed with
its PalmPilot, will add a Web retrieval service to its Palm VII, an upgrade due
this summer. With all this diverse technology it will be hard for one approach
to dominate the field.
And hell may have no fury like America Online (AOL), whose Netscape division
is selling server and e-commerce software to Nextel. AOL had agreed tentatively
to sell a Netscape browser to Nextel before Microsoft came courting: expect it
to find other partners soon. "A lot of companies in wireless data will come on
board for less than a $600 million investment," says Dataquest's Hoffman.
Among companies that make browsers work within phones, investment choices look
even cloudier. Looking for a small specialist turns up penny stocks like
Infowave (V.IWM) and Geoworks (GWRX). Phone.com, which shamelessly changed its
name from Unwired Planet, developed the "microbrowser" that will power Nextel's
Internet access and leads a consortium of other developers. It's due to go
public this spring.
Nextel is acting as a pacesetter in its industry, showcasing a glamorous
partnership that promises more efficient use of its data network and puts some
sell-side analysts in very confident spirits. "There's no question that if
they're going to co-brand with Microsoft, this gives Nextel access to a huge
market of potential consumers that they've never really had access to before,"
says Credit Suisse First Boston analyst Cindy Motz. (First Boston is
underwriting Phone.com's IPO.) That makes the new Nextel better than the old
Nextel, but not necessarily better than the rest of the field. The stock nudged
up 1.5% on Monday's news, then gained another 0.5% Tuesday.
That should continue. But more interesting investment choices will emerge
later this year, after road warriors start packing the Microsoft-equipped
phones. Zona Research analyst Jim Balderston points out that a "skinny"
operating system, perhaps from Sun Microsystems" (SUNW) alliance with AOL, can
do just fine with e-mail and simple text. Bell Atlantic is already selling a
modem that users can pop into laptops for wireless access. The growth and
improvement in all these gizmos could aid the battered stock of 3Com, which will
begin pushing a parade of wireless devices this summer. And Motorola (MOT),
which makes all of Nextel's phones, has an association with a rival browser
called Symbian.
Microsoft has star power, all right. But in wireless Internet access, it seems
less likely to steal the show.
For more information and analysis of companies and mutual funds, visit
SmartMoney.com at smartmoney.com.
(END) DOW JONES NEWS 05-12-99
08:00 AM- - 08 00 AM EDT 05-12-99
S
|
