Microsoft to sock RIM with mobile e-mail

The software giant will make free upgrades available for Microsoft Exchange Server 2003 and Windows Mobile 5.0 that will lift business e-mail and other Outlook data from corporate computers and automatically send it to mobile phones running on Microsoft Windows software.

The upgrade of Exchange Server, which will be available in the fourth quarter, will also benefit users of other mobile devices because handset behemoth Nokia and smart phone software maker Symbian have recently started licensing ActiveSync software that can synchronize the e-mail software on their devices to Microsoft Exchange servers.

The move makes mobile e-mail available to tens of millions of wireless handset users who until now had to wait for their IT departments to install separate server computers and buy them new and advanced mobile devices.

It took Research In Motion more than six years to win more than 3 million customers, and with one big swoop Microsoft will give more than 130 million Outlook users the option to access their business e-mail on the go.

"We heard from our customers they want a simple and easy way to give their employees access to mobile messaging. The thing that has been the complicating factor until now is expensive middleware. We offer it as an upgrade. It's free," said Suzan DelBene, responsible for marketing mobile devices at Microsoft.

Microsoft hopes the move will convince corporations to buy more mobile devices running on Windows Mobile software, which currently make up only a fraction of the total cell phone market.

But consumers with other, more popular smart phone models can also benefit, which makes the announcement very significant.

"That makes the whole thing generally more interesting. It's not just a Microsoft lock-in," said Tony Cripps, an analyst at British research group Ovum.

Nokia and Sony Ericsson have a range of phones that run on Symbian whose operating system shipped in 14 million handsets last year. Global smart phone sales are forecast to roughly double to 50 million units in 2005.

Microsoft said around 80 percent of Exchange Server users already use remote Web browsers to check on their e-mail, which it regards as a key gauge for potential demand.

"If that is true, then there is clearly?enormous potential customer demand," Cripps said, adding that Blackberry would remain a highly reliable, highly secure alternative for those who could afford it.

A Microsoft announcement of this kind was expected by analysts and investors who regard it a logical move for the software behemoth, which has a long tradition of using its massive scale to include specialized software applications in its operating system at low or no cost.

Network technology, Web browsers and media players are applications Microsoft has included in Windows over the years. In some instances, the company has been found to abuse its dominance or its monopolistic power in the European Union and the United States--its Windows software is in over 90 percent of personal computers.

Research In Motion could be hurt most by Microsoft's move.

"While RIM clearly has a substantial lead in wireless e-mail, we believe that details of competing efforts from major vendors could increase investor concerns regarding RIM," Bear Stearns analyst Andrew Neff said in a note earlier this year.

"RIM is facing growing technology challenges...with anticipated enhancements to Microsoft's Exchange Server platform as well as direct competition from companies such as Good Technology and Visto, and continuing challenges in handheld terminals, the company's major profit source," Al Boschulte, chairman of Probe Financial Associates said in a note.

Good and Visto are both privately held companies.

The upgrade of Exchange Server, called Service Pack 2, will also include new security features.