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Cell phone makers shun CE

Nokia and Ericsson will team with palmtop maker Psion in a joint venture to manufacture wireless palmtops with cell phone capabilities.

Cell phone makers Nokia and Ericsson joined British handheld manufacturer Psion in forming a joint venture to popularize a handheld-class operating system with wireless capabilities.

Symbian, the name of the joint venture, will exist to develop and license EPOC, an operating system for portable handheld computers. Psion invented EPOC and is relinquishing its proprietary rights to Symbian.

Based on open standards, the expanded EPOC would challenge Microsoft's Windows CE. It would include Java and other technologies, and its interface will be customizable by manufacturers who license the OS.

Motorola further signed a memorandum of understanding to eventually acquire a stake in Symbian. Nokia, Ericsson, Motorola, and Psion will have rights to use EPOC in their products.

The joint venture opens another front for Windows CE-based devices, which already trail 3Com's popular PalmPilot in market share. And 3Com is currently beta-testing a technology that adds paging to the PalmPilot's capabilities.

EPOC would enable Internet access, messaging, and other data transmission, incorporating industry standards and technologies like Java, Wireless Application Protocol, and "Bluetooth," a short-range radio signal announced last month. Ericsson and Nokia both are part of the Bluetooth's development.

"We plan to establish EPOC as the de facto operating system for mobile wireless information devices and further drive innovation and market growth," Symbian's chief executive, Colly Myers, said in a statement.

"This is a preemptive maneuver by Nokia, Ericsson, and Motorola to try to keep Microsoft out of their business," said telecom analyst Douglas Smith at Salomon Smith Barney.

Meanwhile, the joint venture is a momentous victory for Psion, which has complained that Microsoft's entry into the market is hurting its handheld business.

"It gives them much more of a financial backing and customer base," Smith said. "One of the concerns of Psion was certainly that they would be crushed by Microsoft, and now they have some important players on their team."

Psion will initially own 40 percent of Symbian while Nokia and Ericsson will own 30 percent each.

Reuters contributed to this report.