Internal email discloses Microsoft's wireless plans

Microsoft is negotiating distribution deals with Sprint PCS and AirTouch, and may be preparing to make Hotmail available on wireless devices, according to an email received by CNET

Microsoft is negotiating distribution deals with Sprint PCS, AirTouch and others to boost its technology in the rapidly expanding market for wireless devices, according to an email received by CNET

A "major deal" with British Telecom and AT&T also is in the works, according to the email, which was inadvertently sent to a CNET editor late today.

"We're in discussions for a major deal with these companies," the email said, referring to British Telecom and AT&T. "This is still highly confidential." The email did not provide details, but investments were not mentioned.

The internal correspondence discusses the company's possible announcements Bill Gates at the upcoming Wireless 2000 industry trade show that begins Feb. 28. Microsoft chairman Bill Gates is scheduled to speak at the event.

Microsoft executives declined to comment on the email.

The content distribution deals being negotiated call for AirTouch, Sprint PCS and others to deliver a new version of Microsoft's Internet content service--dubbed MSN Mobile 2.0--to wireless phones, the email said. Mobile MSN, launched last summer, pushes Net content such as news and sports scores to pagers and cell phones.

"If the really big deals were to fall we still have something along the lines of content for Billg's keynote?"

source: internal Microsoft email

Microsoft wants a piece of the booming wireless market. Industry analysts predict that by 2002, more than 100 million phones worldwide will be able to tap into the Internet in some fashion. By 2003, analysts predict that nearly 1 billion mobile phones will be in use worldwide.

Negotiations with dominant wireless companies AirTouch and Sprint PCS "are expected to close" in time for the trade show, and another deal with WebLink Wireless is pending, the email said. Microsoft also may bolster two previously announced deals with Ericsson and Nextel Communications. It did not provide details.

Among the other disclosures in the email:

• The software giant may announce a licensing agreement with Samsung for Microsoft Mobile Explorer, a Web browsing technology for mobile phones. Partnership agreements also may be reached for Microsoft's back-end server software.

• "Mobile MSN 2.0" is expected to be unveiled at the show. The new features may include the ability to get detailed driving instructions. In addition, news from MSNBC, financial information from MoneyCentral, travel content from Expedia, and Hotmail email also may soon be made available on wireless devices.

• During his keynote, Gates may demonstrate Mobile Explorer running on a handheld Windows CE device or "smart" phone. The email also said, "if the really big deals were to fall through (as they sometimes do) do we still have something along the lines of content for Billg's keynote?"

Microsoft launched its wireless content plan last June, with the release of a first version of its Mobile MSN portal page and a $600 million investment in Nextel, one of the few wireless carriers with a nationwide U.S. footprint.

At the time of the Nextel investment, Microsoft promised new services and deals with other carriers---but so far, little has emerged, according to some analysts.

"Microsoft announced the program with Nextel in June, but from what I can tell, nothing much has come of it, " Probe Research wireless analyst Alan Mosher said. The company may have had difficulty integrating some of the wireless data technology it purchased into its wireless service, Mosher speculated.

Microsoft and Ericsson struck a deal last December to create a joint venture in order to develop products that provide fast access to the Net from any device. Ericsson will own the majority share of the venture.

In its biggest communications deal, Microsoft last year invested $5 billion in AT&T. The move advanced two main goals: to become a bigger player in sprawling networks and to align with lucrative customers such as AT&T. As a result of the deal, Microsoft software will be used in millions of set-top boxes deployed by AT&T.

CNET's Jeff Pelline and Scott Ard contributed to this report.