CNET también está disponible en español.

Ir a español

Don't show this again

Phone.com faces stiff competition over cell phone space

A new browser war is shaping up, with combatants this time aiming for control of the tiny screens on Web-based mobile phones.

Mobile
A new browser war is shaping up, with combatants this time aiming for control of the tiny screens on Web-ready mobile phones.

The real estate now belongs almost exclusively to a company called Phone.com, the leading producer of the Web browsers and servers that stream news headlines and email to mobile phones. But as the market begins to grow, other players--from Microsoft to the world's biggest mobile phone manufacturers--are aiming to knock Phone.com from the lead.

The wireless data market is still in its infancy. Most of the major mobile carriers in the United States are just beginning to offer cellular Web services, trailing European carriers. The market potential is huge, however, as worldwide more people own cell phones than PCs. By 2003, industry analysts expect there will be more than 1 billion mobile phones in use across the globe.

Web phone surfing surely won't supplant PC use, analysts say. But the opportunity to read quick news headlines, get sports scores, check train schedules or buy tickets is attractive to consumers, and services should increase as wireless download speeds get faster.

Even if only a fraction of the huge market chooses to surf the Web over a cell phone, it's enough to send any ambitious company scrambling after a cut of the potential revenue.

So far, Phone.com has cut a number of deals with firms such as AT&T, Sprint and Ericsson to use its browser and server products. Those deals have paid off well. Phone.com's stock has jumped more than 800 percent since its initial public offering in June. It posted its first stock split on Monday, and yesterday announced a secondary offering of stock aimed at raising $283 million.

"Phone.com already has deals signed with enough platforms to cover a third of the wireless data world. We target a 50 percent share by June 2000," said BancBoston Robertson Stephens' Marianne Wolk, one of several analysts bullish on the company's prospects. "That kind of momentum is really going to entrench [them] in the market."

Phone.com executives declined to comment for this story, citing "quiet period" restrictions connected to its stock sale.

Known as Unwired Planet until last April, Phone.com was one of the first companies to see the market's potential. Along with Nokia, Ericsson and Motorola, it helped develop technology to translate Web content onto a tiny cell phone screen, and then jumped out to an early lead with its Web browsing and server products.

Phone.com
at a glance

HQ: Redwood City, California  
CEO: Alain Rossmann  
Employees: 233  
Annual sales: $13.4 million  
Annual income: ($20.8 million)  
Date of IPO: June 1999  
Ticker: PHCM  
Exchange: Nasdaq

More:
Phone.com quotes
Phone.com news

Source: Bloomberg 11/10/99

The company now licenses its browsers to carriers like AT&T and Sprint, but says it depends on the sale of its servers for future revenue. Phone.com also recently branched out into the portal business, helping companies build their own branded pages configured especially for wireless access.

If the model sounds familiar, it may be because Netscape once had a similar browser-server-portal model. And like Netscape, Phone.com is now running into competition from a newly interested Microsoft, along with many of the phone manufacturers that helped deliver the original wireless data technology.

"I think you can look at these guys as a kind of mobile [phone] Netscape," said Iain Gillot, a wireless market analyst with International Data Corporation. "No big player is going to ignore the wireless market. And Phone.com is not the only game in town anymore."

Nokia, the largest mobile phone maker in the world, has created its own browser that it's now installing in its Web-ready phones. Spyglass, the developer of the Mosaic Web browser, is now distributing the browser to other customers, though no large carrier has yet signed on.

Other mobile phone manufacturers, such as Motorola, are also testing their own wireless Web browsers, with the aim of installing them in their own phones. They'll do their best to persuade carrier customers to use their own Web browsers instead of Phone.com's, analysts say.

And then there's Microsoft. The software giant initially paved its own path for wireless, eschewing the standard developed by Phone.com, Nokia and others. British Telecommunications is testing its first microbrowser, but the software giant plans to release a second version that will be compatible with its competitors by the end of this year.

"Microsoft is trying to do something very similar [to Phone.com]," looking to provide browser, server and portal services, said Microsoft's wireless telephone product manager, Kevin Dallas.

The Redmond, Wash., company's initial attempt to define its own standards has kept it out of the mainstream--but chairman Bill Gates recently highlighted his intention to bring Microsoft software to all platforms, with a particular emphasis on wireless phones and devices.

"Microsoft has never really got the wireless market, so they haven't been a factor," Gillot said. "But they're Microsoft. There's nothing to stop them from simply going out and buying a few companies and climbing to the top that way."

All of this boils down to stiff competition for Phone.com, which may have its easiest days behind it. But it still has powerful allies on board.

AT&T Wireless has used its software since 1996, as one of the first mobile companies to offer any online services. Most of the other U.S. carriers already use its software, and even manufacturer Ericsson signed a deal this week to include its browser on Web phones. That gives it momentum that analysts and customers say will be hard to shake.

"They are a leader in this area, and really helped us get a lot of presence in the wireless Internet community," AT&T wireless spokesman Ken Woo said. "We fully expect to continue that relationship."

Close
Drag
Autoplay: ON Autoplay: OFF