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Microsoft hits redial in cell phone battle

Company is trying to take on Nokia and others with its latest Windows Mobile release and scores of carrier deals. Photo: Going Windows Mobile

After years of playing runner-up in the cell phone market, Microsoft hopes it has finally found a winning entry.

The software maker will announce Tuesday that it has wrapped up development of Windows Mobile 5.0, its latest operating system for cell phones and handhelds. As previously reported, Microsoft is hoping to boost its fortunes--and grab some market share from archrival Nokia--by creating software that can more easily be customized by device makers and wireless carriers.

"A lot of their requests about customization used to take us a lot of handwork to do what they wanted," Microsoft Chairman Bill Gates told CNET News.com. "With Windows Mobile 5.0, we've taken a lot of the customization and made it really trivial for them to do it."

Gates, who will announce the new version at a mobile developer conference in Las Vegas, noted that Microsoft has already convinced 68 carriers in more than 40 countries to offer phones using its products.


"Two years ago, we basically had Orange, in Europe, shipping our devices," Gates said. "If you go back three years ago, we had nobody shipping any phones from us of any kind."

The company's mobile effort is led by Ya-Qin Zhang--who previously headed Microsoft's Beijing research lab. The mobile effort has focused for some time on an overhaul of the OS that would allow it to run on a broader array of devices.

Microsoft points to a number of features it said will help in that regard, including support for software-based buttons that will make it easier to operate devices with one hand and without using a stylus.

The new version, which has been code-named Magneto, also offers features such as improved mobile versions of Word and Excel, a viewer for PowerPoint spreadsheets, and a mobile version of Windows Media 10 that supports subscription music and viewing of recorded TV shows.

"We're increasingly hearing from our carrier partners that they want to run music and media download services," said Scott Horn, senior director of marketing for Microsoft's mobile and embedded device unit.

Sweating the details
In many cases, however, it's the little things that Microsoft worked on this time around, such as making sure that cell phone operators can customize the color scheme on a device so it matches their logo and not that of a competitor. For years, all of the links on a Microsoft mobile device were colored blue. The company said its early experiences have helped it this go-around.

"It's getting educated on those things," Horn said.

Devices running the new operating system will begin coming to market over the next several months, Horn said. A few products, such as T-Mobile's MDA IV and Samsung's hard drive-based SGH-i300, have already been announced. Others will be announced next week, he said.

Meanwhile, both Hewlett-Packard and Dell said they plan to let some existing customers upgrade their handhelds to run the new operating system. Neither is immediately announcing plans for new devices based on Windows Mobile 5.0 nor saying when the OS will show up on existing product lines.

But Microsoft is clearly focused on the market for cell phone devices--and on touting its progress against chief competitor Nokia--by adding support for hard drives and USB 2.0 connections, and by making it easier to create phones with keyboards.

Meanwhile, Symbian, maker of a rival OS, announced on Tuesday that its first-quarter shipments of phones running its software nearly tripled from the prior year.

"Symbian OS shipments grew strongly in the first quarter of 2005 to 6.75 million, representing more than 180 percent year on year growth," Interim CEO Thomas Chambers said in a statement.

In Windows Mobile 5.0, the software maker also addressed a key shortcoming: Devices running previous versions of Windows Mobile often lost key information if the handheld or phone's battery completely drained. The problem was so bad that some device makers wrote their own software, but Microsoft said it has implemented a feature in the OS called "persistent memory storage," which is designed to take care of the issue.

A RIM killer?
In the past, Microsoft has had three distinct flavors of Windows Mobile: one for handhelds, one for phones and a third for handheld-shaped devices that also packed phone capabilities. The distinctions still exist, but Horn said the barriers between the categories are starting to fall. He said that roughly 90 percent of the code is now common among the categories, though in many cases software written for one class of device still needs to be modified to run on a different kind of Windows Mobile product.

Although Microsoft is updating the operating system that runs on mobile devices, the company is not providing a concurrent upgrade to ActiveSync. That's Microsoft's software that connects cell phones and handhelds to corporate servers. Some had said Windows Mobile 5.0 would be a "RIM killer," directly targeting the maker of BlackBerry devices that are popular in the business world.

While there are not many features directly targeting Research In Motion's stranglehold on mobile e-mail, analysts say Microsoft has set the stage for a showdown through its broader support for devices with keyboards.

"By enabling easy customization, handset manufacturers should be able to introduce attractive BlackBerry handheld alternatives," Stanford Group analyst Pablo Perez-Fernandez wrote in a report issued Monday.

Microsoft added a number of networking enhancements including improved Bluetooth short-range wireless networking. Also, Wi-Fi, which was supported in Pocket PC devices, is now supported for smart phones as well.

The new Windows Mobile version should help RIM's server software rivals including Good Technology, Seven Networks, Visto and Intellisync, Perez-Fernandez said. "Most alternative push e-mail suppliers are already customizing their platforms to run under (Windows Mobile 5.0), and we believe that a barrage of...products will soon hit the market."

"RIM is being attacked from every angle," Perez-Fernandez said, "and we think things will get worse."