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Behind Microsoft's mobile revamp

Pieter Knook, the exec shaping Microsoft's wireless and mobile technology vision, is out to recast a strategy rooted in the belief that what was good for Microsoft was good for the industry.

When it comes to deciding the future of wireless and mobile technology directions, the strategy of the market's biggest software maker is fairly simple: What's good for Microsoft is good for the computer industry.

That go-it-alone strategy has sometimes been responsible for causing friction. Microsoft had only joined a few of the dozens of wireless industry groups, but the software maker moved to repair any disconnect with the wireless industry last week when it entered the ranks of the newly formed Open Mobile Alliance.

The move was part of a broader reshaping of the company's thinking. Until recently, Microsoft had been reluctant to join wireless groups. But that changed after Pieter Knook took over the reins of the group within Microsoft that creates much of the software for wireless devices earlier this year, adding to his duties as head of the Network Service Provider group. Knook is looking to grow the number of devices in the wireless market that use Microsoft's software. To do that he'll have to court network carriers, something that he was already doing in his old job, but now he'll have to juggle even more responsibilities.

CNET News.com caught up with the 12-year Microsoft veteran to talk about the mobile landscape and his plans for retooling the company's approach toward mobility.

Q: Microsoft seems to be reworking the way it views mobility. How is it changing?
A: We did have one fundamental change in strategy. In the early days we had the same view of mobility as we had a long time ago about the Internet. We created one specialized group and they got to know everything about mobility. It was their job and only their job, inside Microsoft, to worry about mobility.

How does the Internet comparison apply?
Just like how we changed that with the Internet, we said, "Look this is not tenable, the Internet is part of everything we do." We have to distribute that responsibility. We're not the only guys building the software for all environments where mobile software is in devices using Microsoft software. And that's really the big difference.

How will that work out in terms of developing products?
It's been a helpful shift because when you look at some of the new PC form factors, particularly the Tablet PC, it's clear that something like a Tablet PC would be intrinsically a device you'd expect to see attached to a mobile network. This would be attached to other kinds of networks, obviously--a fixed network when you're in the office, maybe a Wi-Fi network as you roam around your corridor into meeting rooms, but certainly also when you roam outside your own building so that it should have cellular connectivity built into it, too. There's a family of products--Pocket PC, Smartphone and other members of that family--that will all be attached to mobile data networks.

Does that mean Tablet PCs will include software from the Mobility Group?

"Eventually, it will be hard to distinguish between a Smartphone and an ordinary phone because they will both be free when you apply a carrier subsidy to them."
There are certainly some things that we're trying to do a better job of sharing. We've been putting a lot of energy into, for example, the voice dialer app. For Smartphone, the dialer app will be super important because a lot of people are going to use that device primarily for voice and maybe, secondarily, for data. For the Tablet PC, I doubt that it will be anybody's primary voice device, but it will probably have voice capability built into it. There is a lot of sharing of expertise as we build that functionality onto the Tablet PC platform (so) that they can use a lot of the expertise that we've built up over here in the Smartphone and Pocket PC group.

In the handheld market, the average selling price for devices is shrinking. Do you see that affecting the manufacturers of devices using the Pocket PC operating system? And will devices using the Pocket PC OS continue to go after the high end of the market?
In a sense, yes, we have been in the higher end of the market. However, component prices are coming down so fast that custom manufacturing a color device won't be substantially different from the cost of building a black and white device in the very near future. As that occurs, you see that newer generations of Pocket PC devices are being introduced at lower price points. That's very helpful for us. You get a bigger market that way.

Are you hearing about any sort of slowdown in device sales from your manufacturing partners?
Not really. I know that our share has continued to increase. Even last month I think we went up some more, and we certainly see that the integrated devices, such as Pocket PC devices running Phone Edition with built-in cellular capability, are building a sense of momentum. That, in fact, means that many of the manufacturers are trying to increase their manufacturing capacity.

"We have to be in the tens--if not hundreds--of millions of units within the next four or five years."

What are the new goals for the Mobility Group as the Pieter Knook era begins?
The base goal really doesn't change. For us to be successful we've got to build a level of business where we are a significant enough player...We have to be in the tens--if not hundreds--of millions of units within the next four or five years.

If you look at PDAs, as a percentage of those five-hundred-and-something million handsets that are sold, it's a very small percentage. We expect that to grow for all the economic and cost factors that we talked about earlier, where the cost of these devices will come down. Eventually, it will be hard to distinguish between a Smartphone and an ordinary phone because they will both be free when you apply a carrier subsidy to them.

What's the status of Smartphone?
We are doing the final touches of getting some of the products tested out on the carrier networks. Obviously, all this depends upon the availability of next-generation data networking standards, whether it is GPRS infrastructure or 1xRTT.

How is that affecting delivery schedules?
All of the delivery schedules have been subject to fairly significant delays from the carriers, which has made our job of testing these devices and getting them out into customers' hands difficult. Once we get the bugs ironed out and get the carriers approval, we'll start to see products ready to ship in the next few months, literally.