Microsoft Venture Adds to Blackberry Woes

Monday, February 13th 2006, 10:39 am

By: News On 6

BARCELONA, Spain (AP) _ Microsoft Corp. has won backing from major cellular networks for a new generation of phones designed to transform mobile e-mail from executive accessory to standard issue for the corporate rank-and-file.

The partnerships, with operators including Vodafone and Cingular, to be announced Monday at a mobile industry gathering in Spain, could spell more trouble for the embattled Blackberry and other niche e-mail technologies, analysts say.

Unlike the Blackberry and its peers, phones running Microsoft's latest Windows Mobile operating system can receive e-mails ``pushed'' directly from servers that handle a company's messaging _ without the need for a separate mobile server or additional license payments.

As costs fall, Microsoft is betting companies will extend mobile e-mail beyond top management to millions more of their employees.

``We're at the tipping point of seeing exponential growth in this area,'' said Pieter Knook, the U.S. software giant's senior vice president for mobile and embedded devices.

On the opening day of the 3GSM phone show, Hewlett-Packard Co. and three other handset makers are expected to launch the first Windows smartphones equipped with the new e-mail technology out of the box. HP's new iPAQ HW6900 Mobile Messenger also offers Bluetooth and Wi-Fi connectivity.

Vodafone Group PLC is to sell the phones under its own brand, in a joint marketing deal, targeting companies that already run Microsoft's Exchange software on their servers. Exchange is the collaborative glue behind Microsoft's popular Outlook application, which manages appointments and electronic address books in addition to e-mail.

Together with Cingular Wireless, Orange and T-Mobile, Vodafone will also deliver phone software upgrades to subscribers who are already running the Windows Mobile 5.0 operating system on their smart phones.

Microsoft laid the groundwork for its e-mail offensive with an October update to Exchange _ which led the server software market last year with 48 percent of global sales, according to technology research firm Gartner.

Some observers have been predicting that the new technology will hurt Blackberry's maker, Canada-based Research In Motion Ltd (RIM).

Strand Consult, a Denmark-based IT research house, expects companies worldwide to invest in much broader mobile e-mail access for their employees in 2006.

``At the end of the year, many will be asking themselves whether they really needed a Blackberry handset from RIM to check mail _ and RIM might be asking themselves what went wrong,'' Strand wrote in a research note.

``Microsoft will most probably overtake RIM as the leading mobile e-mail provider.''

Mobile messaging prices are already falling.

In the United States, Cingular last year began bundling an e-mail service from Blackberry rival Good Technologies Inc. with its unlimited wireless Internet package, at no extra charge.

Wireless access to e-mail, calendars and contacts _ once the preserve of jet-setting executives and professionals in law and finance _ is increasingly seen as a useful tool for a wider array of workers, keeping them connected wherever they may be.

RIM has 4.3 million Blackberry customers, most of then in the United States. It enjoys by far the largest single share of a wireless e-mail market now estimated at about 10 million users globally.

But Blackberry's future has been clouded by a court decision that it infringes U.S. patents belonging to NTP, a tiny U.S. technology company that is demanding license payments while seeking an injunction to shut down RIM's servers. A decision could come later this month.

Blackberry Connect, a RIM service offering mobile e-mail on rival operating systems such as Symbian has also failed to make a major impact so far.

``This means the door's been left open for others, including Microsoft,'' said Andrew Brown, an analyst with consultancy IDC.

Microsoft is well-placed to leverage its leadership in server software _ as well as the 400 million PC users already familiar with its Office applications _ but still has work to do, Brown said.

In Europe, larger Windows-powered smart phones trail more compact devices like Nokia's Symbian-based handsets. To make real inroads, Brown said, Microsoft must harness smaller models than the Windows phones to be unveiled Monday by HP and rival computer maker Fujitsu Siemens.

Microsoft will also have to persuade customers that it can match RIM's strong data security record. ``IT decision makers' experience of Microsoft hasn't always been a happy one, so there is some convincing to do there,'' Brown said.

The 3GSM trade show runs Monday through Thursday in the northeastern Spanish city of Barcelona. Last year the event drew 34,000 visitors from more than 170 countries.