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Microsoft jumps into wireless world

Microsoft places its bets on the wireless services market in an attempt to extend its software franchise and create new revenue streams.

    What's behind Microsoft's entry into the wireless services market?

    The software giant announced plans with Qualcomm earlier this week to implement a series of wireless services using its own back-end and consumer-oriented software technology in a new venture called Wireless Knowledge.

    By entering the wireless services arena, Microsoft is placing yet another bet on a market it has not been historically familiar with, in order to extend its Windows software franchise and create new revenue streams. What the wireless market has lacked, according to analysts and industry executives, is a set of easily used applications that allow businesses to extend their current uses of technology. Microsoft fills that void, they say.

    It also represents a subtle shift for the Redmond, Washington-based firm. In the past, it has let others develop services using its software systems. Now they've decided to get in on the action.

    "Just Microsoft's name does lend credibility," said Roberta Wiggins, director of wireless mobile communications for Yankee Group, an industry research group. "There's been a big problem in getting [information technology] professionals to accept the technology. It raises the confidence factor."

    The Yankee Group believes there are currently 2.9 million users of wireless data services in the U.S., expected to balloon to 12.6 million by 2002--a conservative estimate, the firm notes, that could reach 20 million if the right market elements fall into place. One of those elements may be Wireless Knowledge, according to Wiggins.

    "It's certainly a vote of confidence for wireless data," said a spokesman for Sprint PCS, one of nine wireless service providers to sign up with Wireless Knowledge. According to Sprint PCS, half of all services proposals floated by potential customers now include a wireless component.

    Executives at Wireless Knowledge--which will be equally funded by Microsoft and Qualcomm to the tune of an initial $25 million each--say they have been working on implementing a set of wireless services for about a year in advance of the announcement. "Everyone views this as an interesting market to begin exploring," said Tom Clarkson, vice president of marketing and sales for Wireless Knowledge and former Qualcomm executive.

    Microsoft may also view Wireless Knowledge as an opportunity to prove that its back-end server-based software is ready to tackle the industrial strength needs of the telecommunications industry--a market currently dominated by Unix-based systems. One lynchpin of the new set of services--made up of messaging and email, calendar functions, and Web-based data transmissions--is the company's Exchange messaging server software.

    Thus, it can show its wireless success to others in the telecommunications industry as proof of its high-end capabilities.

    One example of how significant Microsoft views the wireless opportunity, is its strategy to provide Web-based services for wireless devices. The company plans to release the software code--usually a closely guarded secret at Microsoft--for a so-called "micro browser" for Windows CE to third parties so they can tailor it to specific hardware.

    Some wonder if these services--scheduled to roll out in the first quarter of next year--will conflict with Microsoft's usual sales channels and customers. That is, companies that already use Microsoft software to offer different types of data-based services may be put out by the idea that potential customers can now go straight to Wireless Knowledge.

    "It's Microsoft's first foray into services based on its platform," noted Dwight Davis, analyst with Summit Strategies, a technology research firm.

    But most see Microsoft's role in wireless services as an enabler--an opportunity for corporations who sign up for Wireless Knowledge's service to easily extend their existing applications and technologies to mobile workers and smaller devices.

    "They're giving carriers a jumpstart in this business," said Jamey Mills, product manager for wireless data services at US West, another provider planning to implement Wireless Knowledge's services.