IT SOUNDS LIKE A GOOD IDEA, BUT... Insiders Are Cautiously Optimistic About Microsoft/Qualcomm Joint Venture
November 27, 1998
WIRELESS DATA NEWS via NewsEdge Corporation -- Earlier this month, Microsoft Corp. [MSFT] formally entered the wireless data market by announcing WirelessKnowledge LLC, a joint venture with Qualcomm Inc. [QCOM]. The group will provide end-to-end Windows data access for corporate clients. Services will include e- mail and access to calendars and contact lists, as well as connections to Microsoft Exchange servers. The services will be offered to carriers on an OEM basis.
One of the surprises of the announcement was that the services would be airlink independent. In addition, the company's data services will support a range of terminal devices, from Windows-based laptops to pagers and even "web access terminals" such as kiosk-based systems and smart TVs.
WirelessKnowledge also announced its carrier partners: AirTouch Communications Inc. [ATI], AT&T Wireless Services Inc. [T], Bell Atlantic Mobile [BEL], Bell Mobility [BCX], BellSouth Corp. [BLS], GTE Wireless [GTE], Leap Wireless International [LWIN], Sprint PCS [FON] and U S West Wireless [USW].
...Welcoming The Venture With Open Arms
The initial reaction to the announcement was a positive one on a variety of levels. For other companies in the wireless data market, the announcement was regarded as validation for wireless data. "Microsoft's planned entry is excellent news in that it shows that the wireless data market is moving forward now," said Roger Nolan, vice president of strategic alliances at Merticom Inc.
"It is encouraging that wireless data is important enough that the big players are willing to put a stake in the ground," said Tyler Proctor, vice president of Zsigo Wireless Data Consultants Inc.
Industry analysts also see this as a positive move. "It is a wonderful announcement," said Ray Jodoin, senior analyst for wireless communications at Cahners In-Stat Group. "It proves that someone has finally realized that the existing network infrastructure is underused. We can provide data services without adding to the existing infrastructure."
One of the things that was left out of the announcement was any indication of what the services that will result from the WirelessKnowledge partnership might cost the consumer or business user. Wireless-Knowledge said that the carriers would be left to decide what the end user would have to pay for such services. This left a bad taste in at least one industry insider's mouth. "Both Qualcomm and Microsoft have been severely criticized for the proprietary nature of their products. They say the product will run using open standards, but someone has to pay the piper, and they are the piper," the insider, who requested anonymity, commented.
He compared this announcement to a major auto manufacturer making a similar announcement at an auto show. "If Ford [F], GM [GM] or Chrysler [C] introduced a new car in this fashion [failing to give the price of the car] at an auto show, they would be laughed right off the show floor. [WirelessKnowledge] has to realize that they are dealing with a consumer market," and cost will be the key ingredient requested by customers.
Jodoin, also expressing concern that pricing was left to the carriers, suggested the carriers should provide WirelessKnowledge services free of charge. Carriers will make their money by the increases in airtime of users taking advantage of these data services, he noted.
...Other Motives?
"This is a shrewd move by Qualcomm," said Eden Zoller, senior analyst of the mobile and satellite group at Ovum. "It has had no luck getting CDMA in Europe. Qualcomm desperately needed a strong ally."
The partnership will help Microsoft as well, when it comes to the European market. "There is a defensive aspect to this announcement on the part of Microsoft," added Zoller. The software giant also needed an ally to compete in Europe to help bring its Windows CE operating system (O/S) to the wireless markets abroad. Standing in Microsoft's way is Symbian, with its EPOCH O/S and its partnerships with the "Big 3" of handset manufacturers: Ericsson [ERICY], Motorola Inc. [MOT], and Nokia Corp. [NOK/A].
The other potential battle that is looming in the distance will be with the Wireless Application Protocol (WAP) Forum, another initiative that has the Big 3 on board. "You can see a real standoff developing here. These companies are terrified of Microsoft moving into this market," Zoller observed.
However, Ben Linder, vice president of marketing at Unwired Planet (UP), a founding member of the WAP Forum, did not appear quite as concerned. "WAP has been accepted by the wireless marketplace as the de facto standard," said Linder, noting that the WAP Forum already has a majority of the wireless community, from handset manufacturers to carriers to infrastructure developers, enlisted in the WAP Forum membership roster, with 11 companies announcing membership this month.
"This is validation for us," added Linder, noting that WirelessKnowledge will be developing products in areas where UP and WAP already have begun market trials.
In terms of these future market battles, it made sense for Qualcomm and Microsoft to join forces. "There weren't any other players that either company could team up with," said Zoller.
While it is too early to tell who the winners and losers will be, this joint venture will bring on a new level of competition in the wireless data industry. It sets the stage for a wave of innovations that will be necessary to carry wireless data into the new millennium.
[Copyright 1998, Phillips Publishing]
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