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Motorola eyes soft modem market

Though Motorola plans to sell off its modem business, software modem technology will not be something it cuts loose.

Motorola (MOT) today announced that its software modems may be embedded in handheld computers running on Microsoft's Windows CE operating system.

Though Motorola recently stated that it plans to sell off its modem business, software modem technology will not be one of the technologies to be cut loose, according to Motorola.

Software modems, which run on the computer's microprocessor rather than separate hardware, are less expensive and easier to upgrade than traditional hardware modems. But so far the new technology also has proven to be slower and less reliable, and prices are not projected to be low enough to justify weaker performance to consumers.

However, in the case of handhelds, where size and weight are of paramount importance, even an imperfect software modem technology may find its niche.

"Motorola developed this technology with the intention of providing a low-cost modem to be integrated into a PC," said Abner Germanow, analyst with International Data Corporation. "But performance hasn't been able to match what you can get in a hard modem, and space isn't an issue even in the laptop. Now they've finally found an issue where customers are willing to sacrifice performance as long as they have the connectivity."

Other handheld devices, such as 3Com's PalmPilot, offer Internet access with the use of a PC card. But except for small firms like PCtel and AltoCom, the software modem field is wide open.

"If Motorola gets a couple of significant wins in this space, it could further the development of soft modems and speed up the rate at which soft modems give hard modems a run for their money. But that's looking out a ways," said Germanow.

Noting that portions of Motorola's modem business are up for sale (see related story), Germanow said it made sense for the company to retain the soft modem line.

"If you start looking at PDAs and cell phones, that's where Motorola is very interested," said Germanow. "This may be a question of their looking at the soft modem division and saying, 'Here's this technology that fits into our core product line and fits into our core strategy.'"