Microsoft, Qualcomm form new firm

Microsoft jumped into the market for wireless data communications today, announcing that it will form a new company called Wireless Knowledge with Qualcomm, a move signaling the software giant's entry into yet another "convergence" market.

The joint venture, as first reported by CNET News.com, will allow wireless carriers including AirTouch Communications, AT&T Wireless Services, Bell Atlantic Mobile, Bell Mobility (Canada), BellSouth, GTE Wireless, Sprint PCS, and US West Wireless, to offer low-cost data services, the companies said today.

Microsoft and Qualcomm will each hold a 50 percent stake in the new San Diego-based company, which will be operated independently of the two stakeholders. Both companies are investing $25 million in the venture.

The data service could be used, for instance, to help workers on the road who are using devices such as digital phones, Windows-based desktop computers, and Windows CE-based handheld devices to hook in to the Internet and corporate networks using Microsoft software.

Once a wireless connection has been established, data is routed from the remote location to the corporate network through the joint venture's operations center.

"With commercial availability slated for the first half of next year, wireless carriers will be able to deliver valuable new services to their customers, regardless of technology or device preference, through the portal of Wireless Knowledge," said John Major, who has been named president and chief executive officer of Wireless Knowledge, in a statement.

Initial service offerings will be available to carriers in early 1999. Wireless Knowledge will offer data services to maintain messaging, e-mail, calendar functions, contact list, and basic information services through the Internet, plus access to Microsoft Exchange-based corporate networks. Additional features and services will be added over time, executives said.

The company is a "terrific concept," said Alan Reiter, president of Wireless Internet & Mobile Computing, because the venture "will attempt to solve some key problems hampering the growth of wireless data."

"For example, it offers a turnkey solution to the wireless industry, and wireless voice carriers are notorious for not being able to offer packaged wireless data solutions to mobile professionals. In short, it relieves the wireless industry of a big headache," he noted.

Also, the availability of secure communications even through company "firewalls" could alleviate a significant concern of corporate MIS directors, speeding deployment of the service, he thinks.

In related news, Microsoft and Qualcomm said they will work to incorporate Windows CE in an upcoming custom chip Qualcomm can use in cell phone designs, and cooperate on integrating Windows CE into a variety of wireless devices.

Wireless Knowledge will have its share of challenges, with or without Microsoft's involvement. "It is difficult enough to provide a wireless data solution to one remote device via one wireless network, let alone trying to integrate multiple wireless networks and multiple [wired] and wireless devices," Reiter said, while adding: "It's hard work, but it is completely do-able."

Although the new company will be independent, its formation opens yet another frontier for Microsoft. To date, large cell phone makers have been avoiding deals with the company, fearing that the software titan would eventually try to exert the kind of control it now enjoys in the PC industry. Some companies, in fact, have joined forces to thwart Microsoft's entry into the market for cellular technology.

But the new venture may prove to be a winning combination in spite of the efforts of cellular equipment providers, other analysts say.

Wireless carriers will be able to sell wireless service to computer users more easily because support for their technology will increasingly be integrated into a wide array of devices, said Pete Peterson, financial analyst with Volpe Brown Whelan. Also, they are tying in to corporate users, who tend to use services that are pricier, and they use them more often then consumers.

For Microsoft, these same wireless carriers will be predisposed to link up with Windows CE-based devices. Qualcomm has a leg up on moving towards future wireless standards that will allow for sending data at up to one megabit per second, he said.