May 6, 2005 4:00 AM PDT

Microsoft aims to be cell phone 'Survivor'

Microsoft's approach to the mobile device market is a lot like the "Survivor" credo.

On the popular reality TV show, contestants are advised to "outwit," "outplay" and "outlast" their opponents. Microsoft is aiming to do all three, though it may well succeed if it only manages the last of those tasks.

The software maker is expected next week to introduce Windows Mobile 5, the next version of its operating system for cell phones and handhelds. The OS, code-named Magneto, is the latest in a string of software releases that highlight Microsoft's attempts to take on rivals including PalmSource and Nokia.

News.context

What's new:
Magneto, the next version of Microsoft's operating system for cell phones and handhelds, is due out next week.

Bottom line:
The release of Windows Mobile 5 further represents the Redmond giant's eye on overtaking its rivals. Will attempts to improve the operating system's design pay off?

More stories on mobile operating systems

"The business is actually doing fine and has had remarkable growth, but we're still way way the underdog there," Windows chief Jim Allchin said.

In the past, Microsoft has created different versions of its mobile software, each designed to run on a particular class of device. There were smart phones and Pocket PCs and even Pocket PC phones, but within a given category, all of the devices bore a striking resemblance.

A key goal this time around was allowing for more design variety. In an April interview, Allchin said the result would be an array of new products, some of which he called "amazing."

When it comes to the mobile-device market, analysts credit Microsoft with showing staying power. Its first devices were significantly less popular than those from Palm. The operating system had its first hit with Compaq's iPaq and eventually garnered a significant chunk of the handheld market. Meanwhile, a longstanding effort to break into phones is starting to bear fruit after some noteworthy stumbles.

"Microsoft has always been committed (to) improving the Windows Mobile experience," IDC analyst Kevin Burden said. "With each new version, they find new things they want to make better."

The company has seen its growth pick up, as well, although the mobile unit is still a tiny part of Microsoft's overall business and the division continues to lose money. Last quarter, Microsoft saw mobile-unit revenue zoom up more than 30 percent from a year earlier, to $80 million. In particular, Microsoft saw its licenses of Windows Mobile for network-connected devices more than double from last year.

While not commenting specifically on the upcoming OS release, Burden noted that Microsoft has shown its commitment to building an operating system that can be used for all manner of mobile devices. He noted that Microsoft's move comes as some companies, such as Sony, have pulled out of the slow-growing handheld market.

Imagining Magneto
As for what's in Magneto, handheld enthusiast sites have offered some indications, including one review of a leaked version of the operating system.

The review describes a number of new features, including an improved one-handed navigation of the device, a more powerful version of the mobile Word program, a viewer for PowerPoint documents and the ability to add photos to contacts allowing for photo caller ID.

A Microsoft representative declined to comment on the features or the timing of Magneto's release beyond what executives have said.

In an interview last year, the man charged with improving Windows Mobile said one of his main priorities was improving the overall quality of Microsoft's mobile operating system.

"We spent a tremendous amount of engineering resources in the last few months to make quality and stability the highest priority," said Ya-Qin Zhang, the former head of Microsoft's China research lab who now serves as a vice president of the company's mobile device unit.

Another important feature is making sure Windows Mobile-powered devices can seamlessly move

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15 comments

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No one will stop MS....
.... other than a majority of consumers who decide that MS's ideas
aren't theirs.

I just hope that there will still be providers of cell phones which are
actually cell phones, not kilobit toys trying to be gigabyte devices.
Posted by Earl Benser (4310 comments )
Reply Link Flag
About phones
Do they actually make phone calls anymore, or was that a function that was dropped when "remote controlled dish washing" was added to the absolutely necessary "features?"
Posted by Christopher Hall (1205 comments )
Link Flag
Illegal Competition?
It seems like maybe it is time for antitrust action in the mobile segment. After all, trying to compete with Microsoft in this segment is like (Joe Average) trying to play poker against a billionaire - he doesn't have a chance because the billionaire can just BUY EVERY HAND!

The fact is that Microsoft's mobile division has lost millions of dollars for (at least) the past three consecutive years, including $224 million this past year (see: <a class="jive-link-external" href="http://www.microsoft.com/msft/earnings/FY04/earn_rel_q4_04.mspx" target="_newWindow">http://www.microsoft.com/msft/earnings/FY04/earn_rel_q4_04.mspx</a>). This alone should weigh heavily as evidence of it's deliberate intent to participate in anticompetitive behavior. After all, WHO ELSE in this segment can afford to lose $224 million in one year? Certainly not the marketshare leader - Symbian. Probably not PalmOne, or Nokia!

What is particularly upsetting is that the press' behavior is just about as bad as Microsoft's. Note that this article mentions Microsoft's REVENUE in the segment, but COMPLETELY SKIPS OVER the fact that it has lost HUNDREDS OF MILLIONS in it's pursuit of the segment. This is EXACTLY THE SAME as what happened when Microsoft was pursuing Netscape, and various others! The "news" sounds more like a Microsoft PRESS RELEASE than a statement of fact (and PROBABLY because that is where it came from!)

I don't know about everyone else, but I would really appreciate it if we could just get straight, honest, news from "news sites" instead of "will Longhorn run on your machine", "can Microsoft kick Google's butt", press releases.
Posted by (29 comments )
Reply Link Flag
Complete and utter bullbullets
Its not MS fault that Palm is lead by an incompetent bunch of fools who cant seem to keep a CEO for more then a year at most. Hell PalmOne is seriously eyeing Windows Mobile for the Treo because PalmSource can't even release a damn OS updated. When was Cobalt suppose to be released? Spring '04 wasn't it? Since then Palm's own devices haven't shipped with anything other then Garnet or whatever OS 5.blah is. This is a company who is so desperate that they have to go out and buy Chinese Linux companies to try and turn around their cluster **** of a mess.

In short Palm made their bed back in 2001. I remember at CES when there was a PDA roundtable and Palm's CEO of the year announced that users dont want sound/color/high res screens/etc. They just care about Palm's ease of use and the whole Palm Zen thing. Palm did this to themselves.
In hindsight I think I know why they said what they said. Theyve been drifting on the coattails of the original Palm OS way back when they first bought it. Updating it, refining it, but never reinventing it. I think the horrible truth is upon us. Palm is incapable of releasing a real update. All they seem to be capable of doing is bolting on crap to a completely obsolete and out of date OS.
One thing that I want to make perfectly clear..I'm no lover of MS's business practices and how they develop their software. Ive ranted many a time over the Pocket PC and its lackadaisical forward momentum that is only a couple steps ahead of Palm. The difference being that MS out of the box with Pocket PC (I try to forget that whole Palm Sized PC nightmare thing.) they had the core architecture ready to go. Just like Apple and OS X, Pocket PC 2000 had potential but was really rough around the edges. By PPC 2005 that will be debuting this summer the edges are buffed, polished, and ready to go. You can fault MS for many a thing but you can't fault them for Palm committed Hari-kari.
Posted by Jonathan (832 comments )
Link Flag
Right ON Microsoft!
As a developer and user of mobile phones I find the current total absense of standardization hard to cope with. Microsoft is the only company capable of setting a real standard. This will long-term mean that mobile phones will be like PCs. That is, vendors can only play with price, performance and packaging, but rather little with function. For the majority of users, developers and IT-support this is only beneficial.

Symbian suffers from two major problems:
1. It is a "commitee" product defined by competitors (=slow process full of compromises and politics)
2. It only offers C++ which makes it much less useful for enterprise (in-house) applicatons than Microsoft's .NET. The Java (J2ME) add-on is a seriously crippled system, not in any way comparable to .NET.
Posted by (15 comments )
Reply Link Flag
Please wait while I reboot my phone
Anders Rundgren said, "Microsoft is the only company capable of setting a real standard."

Oh, really? Palm isn't capable? Well, Mr. Rundgren, for the record, I'm on my fifth Palm phone. And I have apps on the fifth phone (a Treo 600) that came on the first phone.

Also for the record, my FIRST handheld, which was prior to my first Palm phone, was a Casio "Casseopia", which ran Windows CE (2.0). It wasn't capable of running 1.0 apps, or any version after 2.0. NOTHING worked well on it. And Microsoft has revised the OS 15 times since then! And EACH revision is incompatible with the others! And you're going to tell us that Microsoft is the only one capable of setting standards? HAHAHAHAHAHAHAHAHAHAHAHAHA!
Posted by (29 comments )
Link Flag
BTW...
BTW, Mr. Rundgren, Palms (and Palm phones) run Windows (Office) apps better than Windows handhelds! (They also do everything else better and have 5 times the battery life!)
Posted by (29 comments )
Link Flag
Reality Check
Microsoft is only a player in this market because of their promises and our hopes. I have given the IPAQ 6315 the benefit of the doubt for the last 9 months and it just does not do the job. And I think it is the Pocket PC software that is the weakness. Their new upgrade will only help them try to catch up. I'll be swithcing back to a Blackberry soon.
Posted by (1 comment )
Reply Link Flag
Cell Phones PDA's Palms and GPS's
If I could get any of these huge companies to buy my patents or lisence them from me, They would be able to gain access to a huge market share. I own the patents that include any type of magnification for Cellphones homephones PDA's, Palms and GPS. To be built into or added as an accessory. There are over 150 million persons in the US in the groups of seniors, babyboomers and vision impaired. This would also make these cell phone and personal data corporations compliant with the American Disabilities Act. Who thought it would be so easy to gain majority of market share.

[Edited by: admin on May 6, 2005 3:06 PM]
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Posted by (3 comments )
Reply Link Flag
Put simply...
Put simply, if a company is losing 200 million a year on a product (such as Windows Mobile), the company is OBVIOUSLY selling BELOW HIS OWN COST. That is clearly anticompetitive. Especially, if the company is one that has already been tried repeatedly, on multiple continents, for anticompetitive behavior!
Posted by (29 comments )
Reply Link Flag
Troll?
The article says that last year they made $80million. Can you back it up when you say the company is losing $20million a year or is just the usual troll crap that is taking over the internet.
Posted by (79 comments )
Link Flag
 

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