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Microsoft, Qualcomm to form company

The two companies next week will announce the formation of a new company focusing on wireless data communications.

Qualcomm and Microsoft will announce the formation of a new company focusing on wireless data communications next week, a move heralding the software giant's entry into yet another "convergence" market.

The joint venture, which will operate independent of the two companies, will promote the "convergence of wireless and IT computing," a Microsoft spokesperson confirmed.

Other partners will join Qualcomm and Microsoft on November 10 at a press conference in Redmond, Washington, and will discuss supplementary products and services, the spokesperson said. Such services could include a network operations center for connecting corporate "wired" networks to wireless networks, said Alan Reiter, president of Wireless Internet & Mobile Computing.

Industry sources familiar with the company's plans confirm that the venture will focus on offering "ubiquitous" wireless data service that could be used, for instance, to help workers on the road hook in to a corporate network via a virtual private network (VPN). 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.

John Major, president of Qualcomm's Wireless Infrastructure Division, is expected to head the new company, said a source close to Qualcomm.

Microsoft's motivation could be that they need to attack the wireless market because units sales of cell phones have eclipsed PCs, said the source. By linking wireless devices back to the corporate network, these devices have to be compatible with Windows software residing on that network, he reasoned.

The companies may also discuss how technologies such as Microsoft's Windows CE operating system and Web browsers will be integrated into cell phones, analysts said.

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.

In June, Nokia, Motorola, and Ericsson formed a joint venture called "Symbian" with British handheld manufacturer Psion to combine Psion's EPOC operating system with cell phone technology.

The move was widely seen as a preemptive strike to keep Microsoft from dominating the nascent market for next-generation "smart" cell phones, which could eventually offer the ability to display email and Web pages in addition to their everyday functions.

"It comes as no surprise that Microsoft and Qualcomm are interested in getting together," said Reiter.

In light of the Symbian venture, both companies have been looking for partners to help develop advanced phones and data services, he noted. Both are eager to target a market that could reach 1 billion cell phone subscribers by 2005.

Reiter speculated that the new company would work to make data from Microsoft's office productivity applications accessible from cell phones. Also, a deal to develop a cell phone that uses Microsoft's recently announced "microbrowser" for cell phones and Windows CE could be in the works.

Qualcomm and Microsoft declined to comment further on the venture.

Interestingly, the new venture also comes shortly after Qualcomm introduced a combination digital phone and handheld digital assistant based around 3Com's Palm operating system. That phone is supposed to be available to subscribers in the first half of 1999.

Microsoft has already been aggressively targeting 3Com's business for handheld information appliances, a market which the PalmPilot currently dominates. The Palm-based cell phone project could conceivably be sidelined by the new company.

A 3Com spokesperson said only that 3Com's deal with Qualcomm was not exclusive to either company, and that 3Com was seeking to strike similar deals to use its operating system software.