Microsoft venture struggles to sharpen its focus

A high-profile wireless telecommunications firm backed by Microsoft and Qualcomm is still offering more questions than service more than a year after it was created.

4 min read
More than a year after it was formed, a high-profile wireless telecommunications firm backed by Microsoft and Qualcomm is struggling with its strategic direction.

Hampered by service delays and the recent departure of its chief executive, Wireless Knowledge has worked to make a name for itself with the corporate customers it hopes will use its mobile data services for cell phones and other handheld devices.

Wireless Knowledge now has a new CEO and announced its first commercial product offering via a partnership with AT&T's wireless PocketNet service. Despite the recent news, the company has so far disappointed those who had high expectations when the venture first opened its doors last November.

"The Microsoft name really helped generate interest in the whole wireless Internet space," said Alan Mosher, a wireless industry analyst at Probe Research. "Now something that Microsoft had been closely involved in since the launch just has not done what it promised to do."

"They've had a couple field trials close down over the past couple months and other tests have been slow. It came out with great fanfare and a long list of carrier partners and really nothing has come of it," Mosher said.

Wireless Knowledge's delays can largely be traced to compatibility problems between equipment used by many of the wireless service providers and the company's software. But those problems have since been fixed, according to Randy Salo, the firm's vice president of engineering.

The company characterizes these problems as those typical of a developing firm.

"Even though we have a lot of backing, we're a start-up pure and simple," said Eric Schultz, the new chief executive at Wireless Knowledge. "We've been growing so rapidly. I think the [CEO change] is just a natural step in the evolution."

But some analysts remain skeptical.

"Sure they're a start-up, but they've got a whole bunch of backing," Cahners In-Stat Group wireless analyst Ken Hyers said. "They've got Qualcomm, the grandfather of CDMA technology, and the world's richest man in their corner. With that kind of backing, it's a little different that two guys in a garage."

So-called CDMA technology is the wireless transmission method espoused by Qualcomm, a company that has seen its stock soar as it revamps its business strategy.

The market for wireless data has long been expected to be huge, once the technology is in place. Already more cellular phones are sold each year than PCs, according to many estimates. Yet wireless data technology has been slow to come to market, and so far doesn't work well with other technology. Wireless Knowledge's woes are only the latest example of this, analysts said.

In light of the technology concerns, the company's new CEO comes to Wireless Knowledge at a critical time. Schultz replaced John Major, a former Qualcomm executive and long-time player in the wireless voice market, as chief executive of the joint venture.

Schultz said Major's experience was helpful when Wireless Knowledge was first adding wireless carrier partners. Now that the focus has shifted to delivering services, Schultz--with nearly 15 years in the high-tech industry and two years as Microsoft's director of wireless strategy--thinks his knowledge of "data services and the enterprise customer space" can serve the venture well.

Major stepped down last week to pursue personal interests. But some analysts suggest that Microsoft may have wanted its own man in charge all along.

"[Wireless Knowledge] hasn't performed yet. So I would imagine what's going on is Microsoft is really concerned about it and that's why they've installed a Microsoft guy," Probe's Mosher said.

Wireless Knowledge intends to offer wireless connections to corporate networks and software applications to big businesses. The company's "Revolv" service provides wireless access to Microsoft Exchange server-based applications such as email, calendars and shared contact databases.

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"It's all about the bread and butter of what people actually use when they're on the road," said Cahner's Hyers. "Contacts, calendars, and sales order forms. It's not sexy, but it's what makes business work."

Although the wireless industry is buzzing about offering high-speed Internet access, analysts say the next-generation networks necessary to make mobile Net access compelling to a wide audience are still years off.

"We want to get the email and calendar up and running and then add in, rather than diffusing the focus before the initial applications are out there," Schultz said.

AT&T announced last week that Wireless Knowledge's Revolv offering will be compatible with its PocketNet wireless data service. The announcement marks the first commercial availability of Revolv, which was expected to be available via some carriers during the third quarter.

Now Wireless Knowledge expects the majority of its wireless carrier partners to make Revolv available during the first quarter of 2000, although Schultz said some partners may introduce service as early as December.

Several of Wireless Knowledge's carrier partners, including Sprint PCS, AirTouch Communications and Bell Atlantic Mobile, among others, are offering trials of the service, according to executives.

"The trials are really well beyond what we'd ever expected at this point," Schultz said. "I'm real bullish in terms of the number of end users we have. These trials are more inline with targeted commercial deployments for other carriers."

Analysts said the AT&T deal is a good first step for Wireless Knowledge, noting that the wireless data industry has been plagued by many false starts in recent years. And Wireless Knowledge executives insist there is a solid foundation upon which they can build.

"We've moved from the 'shake the ground' start-up mode during the first year to where we've now got the visibility," Shultz said.