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Microsoft phones step into Canada

Rogers AT&T Wireless becomes the second Canadian carrier to sell mobile devices powered by Microsoft's operating systems, in a deal marking the debut of Smartphone 2002 in Canada.

Canadian carrier Rogers AT&T Wireless is picking up Microsoft software-based devices, in a deal that will mark the debut in Canada of Microsoft's Smartphone 2002 operating system.

Rogers will sell a number of Microsoft-centric wireless services and devices, targeting business customers first, a Microsoft representative said Thursday. The first to appear will be a Siemens SX56 handset, powered by Microsoft's Pocket PC Phone Edition operating system. The phone is set to go on sale in a few weeks, the representative said.

In addition, Rogers plans to become the first of Canada's four major wireless carriers to sell a Smartphone 2002-based cell phone, which typically have more functions than handsets running Pocket PC phone edition, according to Rogers. The carrier did not release the price of the Siemens phone or additional details about the launch of the Smartphone 2002 handset.

Microsoft faces "an uphill battle" in Canada, where wireless hybrid phone-PDAs using a rival operating system from PalmSource, Palm's software arm, enjoy a 60 percent market share of the high-end cellular market, said Warren Chaisatien, a senior analyst with IDC Canada.

About 40 percent of Canada's citizens, roughly 12 million people, now use cell phones. Chaisatien said that figure should nearly double by the end of the decade. "There's room to grow," he said. That market is the one Microsoft is trying to capture, he added.

Another hurdle Microsoft faces, said Chaisatien, is that it's late to the market, beaten there by devices made by competitors Handspring and Research In Motion, which is based in Canada. Rogers already sells two versions of Handspring's Treo handheld and RIM's Blackberry e-mail device.

Microsoft has two operating systems for wireless devices: Pocket PC Phone Edition and Smartphone 2002. Pocket PC Phone Edition products can make phone calls, but have a large screen and lack a number pad. By contrast, devices running Smartphone 2002 look like slightly bulkier cell phones, with a jog dial for one-handed dialing and browsing of contacts and other information.

The first Smartphone 2002 handset to hit the high street was the SPV, launched in the United Kingdom and sold by European carrier Orange.

The deal with Rogers is similar to the one Microsoft reached last year with U.S. company AT&T Wireless, which partly owns Rogers in Canada.

Rogers is the second carrier to agree to sell a wireless device based on Microsoft's software. Last September, Bell Mobility, the wireless arm of Bell Canada began selling the Thera hybrid PDA-phone, which uses Pocket PC Phone Edition.

Rogers and Bell both have 3.3 million subscribers, and share the No. 1 slot in terms of numbers of subscribers. Second is Telus Mobility with 3 million subscribers. In fourth place is Fido, the wireless arm of Microcell, which has about 1.2 million subscribers.

However, in the PDA market in Canada, Microsoft is gaining a better foothold overall, Chaisatien said. Currently about 20 percent of all such handheld devices use the Redmond, Wash.-based tech giant's Pocket PC software, he said.

"The research that we've done in Canada consistently shows that Pocket PC devices are gaining popularity, especially among enterprise users," he said.