Alcatel and 3Com Link Up To Join the All-in-One Race By KIMBERLEY A. STRASSEL and KEVIN J. DELANEY
Staff Reporters of THE WALL STREET JOURNAL
HANNOVER, Germany -- The hotly contested market for mobile communications devices just got even hotter. French telecommunications equipment maker Alcatel SA and U.S.-based networking company 3Com Inc. said they would team up to try setting the dominant software standard for smart, mobile information devices. Their entry creates a three-way race among those two companies, Microsoft Corp. and much-ballyhooed U.K. start-up Symbian PLC. At the same time, Symbian announced that it would strengthen its position in the market by working with Sun Microsystems Inc. to incorporate its popular programming language, Java, into its products. At the heart of the announcements is the growing market for all-in-one devices that allow customers to store information, make phone calls and gain access to the Internet. Companies such as Microsoft and Symbian -- a joint venture among Finland's Nokia Corp., Telefon AB L.M. Ericsson of Sweden, U.S.-based Motorola Corp. and Britain's Psion PLC -- have been jockeying to provide the operating systems that allow these devices to run and interact with other technology. An estimated one billion people will have mobile phones by 2005, and up to 15% of that market will be wireless information devices of the type Symbian, Microsoft, 3Com and Alcatel are racing to provide, analysts say. While Symbian's EPOC system and Microsoft's CE system have to-date been the main rivals for information devices, analysts say the arrival of 3Com and Alcatel turns the market into a three-horse race. But the two new partners have a lot of ground to make up. Symbian already has mighty telecommunications partners, while Microsoft has been busy tying up alliances in Europe's mobile market.
Deciding on a Platform
"The weakest of the three is Alcatel and 3Com," said Justine Heys, principal analyst at Yankee Group in London. "Microsoft has the marketing power behind it ... Symbian has 85% to 90% of the world handset market." Ms. Heys said much of the race will come down to winning over telephone manufacturers and network operators. In addition to Symbian's partners, companies such as Sony Corp., Philips NV and International Business Machines Corp. are all trying to decide which platform to adopt for their customers. In contrast to some of their competitors, Alcatel and 3Com don't intend to merge telephones and handheld computers. They said they will likely use Bluetooth, a technology developed by a number of big-name partners including Intel Corp. and IBM, which allow devices to communicate via radio waves. Theoretically, a user could surf the Web with 3Com's popular Palm device over a radio connection with a mobile phone in his pocket. The two companies plan to distribute their standard free to other software and equipment developers in an effort to generate enthusiasm. While creating their own platform, Alcatel and 3Com said they were discussing the possibility of integrating Sun's Java programming language as well as Jini, Sun's technology that enables devices to hook up to networks. The two companies stress that their agreement is nonexclusive and Alcatel raised the possibility of working with Windows CE and Symbian in the future. "We'll probably make some interoperability with those products also," said Patrick Liot, president of Alcatel's professional and consumer division.
Major Endorsement
For Sun, the deal with Symbian is a major endorsement of its Java and Jini technology in mobile communications. Symbian's partners include the world titans of the mobile phone field such as Nokia, Ericsson and Motorola, and the group is expecting to count between 40 million and 60 million users of their products over the next five years. Symbian has rushed to put out the first of these devices, and last week Ericsson showcased the first EPOC-based mobile phone, slated for delivery later this year. "If we'd stood up four years ago and said we'd have Java in all these mobile phones, you'd have hauled me away in a straitjacket," said Scott McNealy, president and chief executive officer of Sun, at a news conference at CeBIT, an annual European technology fair. "But this is the future of communications, and we need to be there." A cooperation, rather than a financial stake in Symbian, gives Sun greater opportunities to provide its technology to the most partners possible. Sun recently quashed rumors that it planned to take a stake in Symbian, and analysts say Sun was worried that a financial commitment might have prompted rivals of Symbian to turn their backs on Sun's products. Sun sees broad cooperations as a further way of pushing Microsoft out of future information-devices deals. Microsoft, though, has no intention of missing out on the mobile market. Since the debut of its CE products one year ago, the software giant has been busy signing up new partners, and now counts 28 different partners producing CE-specific appliances. Microsoft says it sold 1.3 million CE devices, a growth of 170%, in 1998, and the devices are now used in more than 500 commercial applications. At the CeBIT show, Microsoft unveiled a new screen phone that will run the CE system. Microsoft wants to extend beyond just devices and into services. Its latest move in that direction was a partnership with British Telecommunications PLC. The two companies plan to offer services that will allow BT corporate clients to gain access to all their data information via a broad range of wireless communication devices. Jonathan Roberts, general manager of market development for Windows CE, said in addition to partners such as BT, Microsoft's strength over rivals is its end-to-end products. Companies such as Symbian and 3Com, said Mr. Roberts, were only focused on the end products, whereas Microsoft is also involved with the machines providing information such as servers and computers. He said that while Symbian is focused mainly on mobile phones, Microsoft has the ability to put CE in all types of communications devices. "What Symbian has is some nice relationships with phone companies," said Mr. Roberts. "But mobile phones won't be the primary devices." |
