Microsoft/Nextel deal boosts wireless Net apps
By R. Scott Raynovich
Redherring.com
May 29, 1999
Microsoft's (Nasdaq: MSFT) $600 million investment
in Nextel Communications (Nasdaq: NXTL), formally
completed today, is expected to give a boost to the
market for wireless applications based on the Wireless
Applications Protocol (WAP).
The partnership is expected to
yield one of the first systems for
delivering a stripped-down
version of Internet data to mobile
phones using a wireless packet
data network. This could prove
the potential for the use of WAP,
which allows mobile phones and
other devices to more efficiently access Internet-based
applications designed for wireless networks.
"It highlights the value of wireless assets for delivering
data, voice, and Internet services," says Harvey Liu,
senior analyst at CIBC World Markets. Nextel has a
sophisticated customer base that is more likely to use
wireless connectivity to access Web data, says Mr.
Liu. "This is a natural extension that provides Internet
content to people on a 24 by 7 basis."
INFUSION FOR NEXTEL ONLINE
Nextel will use Microsoft's
investment to fund its Nextel
Online system, which will be
deployed to 50 million points of
presence (POPs) by year-end,
according to Nextel officials. It
will be tested in several major
cities, including New York and
Atlanta, as early as the end of the
summer.
Because Nextel's networks are
based on a packet data network, rather than the voice
circuit networks employed by many of the traditional
telecom carriers, it's in a position to focus on data
services and the Internet, says Mr. Liu. "They're using
a packetized data network which makes Internet
services more efficient," he says.
ARRIVAL OF THE WAP APPS?
Nextel officials say that the online service will deliver a
series of WAP-based interfaces that strip out Web
graphics, enabling the Internet data to be more easily
delivered over wireless links.
Observers say this points to an opportunity for
companies developing Internet apps. "This will help
companies write more apps to provide value-added
services because they see WAP as an emerging
standard," says David Freedman, senior managing
director at Bear Stearns (NYSE: BSC).
Indeed, interest in the WAP protocol has flourished in
just the past several months. The WAP Forum, an
organization that oversees the standards for developing
WAP-based applications, was officially founded by
LM Ericsson (Nasdaq: ERICY), Motorola (NYSE:
MOT)), Nokia (NYSE: NOK), and Phone.com
(formerly Unwired Planet) in January of this year.
Since then, another 33 companies have joined,
including both Nextel and Microsoft. Software
companies that belong to the organization include
Geoworks (Nasdaq: GWRX), Spyglass (Nasdaq:
SPYG), Mapquest (Nasdaq: MQST), and Starfish
Software.
The deployment of WAP apps may make the mobile
phone a more viable competitor to other wireless
devices like personal digital assistants for accessing
Web data. During the past five years, cellular
penetration in North America grew from 15.6 percent
to 42 percent of households, according to Forrester
Research. Forrester expects that by 2003, nearly 57
of all North American households will be cellular
subscribers.
Some companies are already focusing on WAP apps.
For example, Phone.com, which is expected to go
public next month, has been a contributor to wireless
applications being used by equipment providers like
Nokia and Alcatel (NYSE: ALA).
In exchange for the $600 million investment, Microsoft
received approximately 16.67 million shares of Nextel
stock, accounting for a stake of roughly 4 percent of
the company.
herring.com:80/insider/1999/0529/news-nextel.html |
