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To: Mats Ericsson who wrote (2980)	12/8/1999 10:11:00 PM
From: Walcalla	Respond to of 34857

Microsoft an also-ran in wireless Internet -analysts Reuters, Wednesday, December 08, 1999 at 19:15 By Martin Wolk SEATTLE, Dec 8 (Reuters) - Microsoft Corp. (NASDAQ:MSFT) remains an also-ran in the exploding market for wireless Internet access despite its plan to join forces with Swedish mobile phone maker Ericsson (SWED:LME.B), industry analysts said Wednesday. "Right now Microsoft just is not the player they thought they were going to be," said analyst Rob Enderle of Giga Information Group. "I think Ericsson is kind of desperate because Nokia (HELS:NOKS.A) has been eating their lunch." In announcing plans to set up a joint venture company with Ericsson to provide wireless systems, Redmond, Wash.-based Microsoft also conceded its struggling Windows CE operating system will have only a limited role in running advanced mobile phones. Ericsson instead reaffirmed its commitment to use the rival Epoc operating system in its wireless phones, and Microsoft said it would provide stand-alone Web browsing software dubbed Mobile Explorer, splitting it off from the scaled-down version of Windows. Epoc is marketed by the Symbian consortium, of which Ericsson is a member. Microsoft shares fell 1-1/4 to close at 91-3/4 on Nasdaq, while Ericsson gained 12 percent to close at 549 crowns on the Stockholm exchange. "We're not moving away from CE at all," insisted Thomas Koll, Microsoft vice president for network solutions. "We see CE as being critical to what we're doing in the palm-sized PC marketplace as well as a wide variety of devices including smart phones." But he said in a conference call with analysts and reporters that Microsoft has come to recognize that Windows CE is not appropriate for small, lightweight phones such as those made by Ericsson. "Microsoft appears to be taking a more pragmatic approach to the browser and the operating system," said Greg Blatnik, a vice president at Zona Research. "The two are not linked together in any way that I can tell. That clearly is a concession." With mobile phones already outselling personal computers on a unit basis and growing at a rate of 50 percent annually, analysts expect an explosion of wireless Internet applications. Microsoft desperately needs to establish a beachhead in the market to compete with rivals led by Phone.com Inc. (NASDAQ:PHCM) and the Symbian consortium. But carriers and equipment makers have been hesitant to join too closely with Microsoft for fear of giving the software giant the kind of market leverage it has been accused of exploiting in the personal computer space, Enderle said. More than a year ago Microsoft announced a similar wireless joint venture with Qualcomm Inc., (NASDAQ:QCOM) which was said to be supported by several of the biggest U.S. carriers, but no products or services have yet emerged from that arrangement, several analysts said. Executives said the Microsoft-Ericsson joint venture, to be based in Sweden, likely would not have any products available with the mobile browser until early 2001. Microsoft executives said they hope the new generation of wireless services would drive demand for back-end server operating systems and applications such as billing and data exchange based on its Windows NT technology. Peter Ausnit, an analyst with Volpe Brown Whelan & Co., agreed, saying Ericsson's relationships with wireless carriers would give Microsoft a new and important channel of distribution. "I think this is really about getting NT servers into the carriers," he said. But others cautioned that Microsoft faces stiff competition from rivals including Oracle Corp., (NASDAQ:ORCL) Sybase Inc. (NASDAQ:SYBS) and Sun Microsystems Inc., (NASDAQ:SUNW) particularly for the most business-critical applications.