Qualcomm Inc. and Microsoft Corp. plan to announce this week they are creating a new wireless communications company to focus on the integration of wireless data, information technology and computers.
According to information leaked to the press last week, the venture aims to extend Microsoft’s Windows CE operating system to Code Division Multiple Access phones created by Qualcomm. But many expect an announcement that will address issues far beyond mere handsets.
Speculation is the two will team with other strategic partners to deliver a complete, end-to-end corporate enterprise solution of which wireless will be only a portion.
“Windows CE in the handset is not where the money is. The big money is in the back office,” said Richard Luhr, an analyst at Herschel Shosteck Associates Ltd., which soon will release a report titled, “The Strategic Implications of Computing and the Internet on the Wireless Industry.”
Luhr said Microsoft wants its software not only in the handsets but the corporate servers as well, and that Microsoft is teaming with a wireless company to make its back-office software more attractive. For its part, Qualcomm is looking to include its CDMA handsets in a much larger, in-demand solution to make its products more attractive.
“Qualcomm sees it as a way to push CDMA forward. Microsoft sees it as a way to get its foot in the door of the wireless data industry that doesn’t exist yet,” Luhr said.
By joining forces, the companies also can better battle a shared rival, the Symbian venture, which includes Motorola Inc., L.M. Ericsson and Nokia Corp. Symbian is backing the EPOC operating system from Psion plc.
Through the Symbian venture, Psion’s EPOC operating system now has a head start over Microsoft’s Windows CE in the wireless arena, and even Bill Gates has admitted the company poses a significant challenge.
“Yes, this is a reaction to Symbian. It’s about who can get their hooks into the corporate enterprise first,” Luhr said. “This is really big in that it shows Microsoft is not going to give up. They’re going to go after the market with anybody who’s in there.”
However, there are challenges. Many say Windows CE is not optimized for handset use.
“I think Windows CE has a long way to go to fit into the size, memory and processing constraints of these devices,” said Konstantin Zsigo, president of Zsigo Wireless Data Consultants Inc.
If any other smaller company suggested using a system like Windows CE on wireless phones, they’d be laughed at, Zsigo said. “But this is Microsoft.”
Either Microsoft could evolve Windows CE to fit Qualcomm’s handsets, or Qualcomm could create smarter handsets to better handle Windows CE. Either way, Microsoft’s muscle could add firepower to the emerging wireless data market.
“I would be very concerned when Microsoft enters a market like this,” Zsigo said. “All people huddled around independent, non-Microsoft groups are in trouble. Microsoft has the power to freeze a market for a year without delivering anything, that’s how powerful they are. People will stop everything for 12 months just to see what happens.”
But to the wireless data industry, the announcement Microsoft is planning such a potentially large venture is a ray of light illuminating a field longing to emerge from the shadows of obscurity. Already, magazines representing the nation’s larger business journals have contacted wireless data analysts accustomed to speaking only with wireless press.
Zsigo feels the entrance of heavy hitters like Microsoft and Qualcomm will get the attention of application developers, who have paid little attention to the industry because it lacked mass-market interest.
“Microsoft brings developers to the table,” Zsigo said. And Qualcomm “has a mainstream distribution of product.” Together, they could produce a popular wireless data system.
“It wouldn’t be considered a speciality product. Then you have an immediate route to the mass market.”
The wireless data industry for years has been trying to make a business of bringing corporate intranet data to mobile devices. To date, the data networks, technology and devices to do so have been fairly specialized, expensive and limited to vertical markets.
The stumbling blocks include the matter of adding a wireless public network to an existing private system, the security issues of transmitting sensitive data over public wireless data networks and the limited handset availability and coverage of those wireless data networks.
Microsoft wants to deliver a solution using its software in the back-office servers as well as any terminal connected to it, including wireless phones. That would go a long way in meeting the first stumbling block mentioned-compatibility.
To address the security issue, reports last week said the new company will create a call center that will handle those sensitive links between corporate environments and public networks in a protected fashion.
As for availability and coverage, CDMA handsets and networks are much more prevalent than even the leading equivalent in the wireless data industry today. While Cellular Digital Packet Data networks have expanded in the last year, the technology still lacks footprint in many cities.
“[CDMA] has a much larger footprint than CDPD. It solves the problems of reliability and availability,” said Zsigo.
Why Microsoft chose to go with CDMA technology likely has to do with the fact L.M. Ericsson, the leading Global System for Mobile communications provider, has backed Symbian. While Qualcomm likely will tout its partnership with Microsoft as an endorsement of CDMA, analysts believe Microsoft will not stop with one technology standard.
“We don’t see this as a big win for Qualcomm,” Luhr said. “This won’t be the only venture Microsoft gets involved in; not by a long shot.”
He predicted the software giant soon will look to other technologies, including GSM.
“CDMA is a tiny piece of the market … So Microsoft is going to play with it for a while, but they’re going to get hungry for more,” Luhr said, defining the venture as a test. “This is just the first salvo.”
