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Firms Team to Develop Mobile Phone Software

Technology: Motorola, Nokia, Ericsson join British palmtop company to take on Microsoft.

June 25, 1998|From Bloomberg News

LONDON — The world's top mobile phone makers--Nokia, Ericsson and Motorola Inc.--have teamed with British palmtop computer company Psion to develop software for mobile phones that behave more like computers, the companies said Wednesday.

The venture, called Symbian, aims to beat out Microsoft Inc.'s Windows CE, now used in many palmtop computers, to become the standard operating software for mobile communication devices. Psion estimates the market could be worth $900 million by 2002.

The mobile phone makers hope Psion's EPOC software, which uses less power and memory than Windows CE, will give them an advantage in getting consumers to buy "smart" mobile phones rather than bulkier palmtop computers.

The support of the three major mobile phone makers means EPOC becomes the market leader in smart-phone software, effectively locking out Microsoft.

Psion's EPOC will become the basic software used in mobile communications, and it will allow the phone makers to develop other applications that can work on the platform, Psion said. EPOC will also support applications, such as Microsoft Office, developed by other software companies.

Under the agreement, Psion would own 40% of Symbian, while Finland's Nokia and Sweden's Ericsson would together pay $96 million in cash for 30% each. Their shares would be diluted when Schaumburg, Ill.-based Motorola, which agreed Wednesday to join the venture, actually joins.

The companies wouldn't say how much Motorola would pay for its stake, but the U.S. company expects to participate "as soon as possible," said David Brown, chairman of Motorola Ltd. in Britain. That would leave Psion with 31% of Symbian and the other three companies with 23% each.

Patrick Yau, an analyst at Nomura International in London, said it appears that Motorola, which lagged behind Nokia and Ericsson in adapting to digital technology, is "hedging its bets" in joining the venture.

David Potter, Psion's chairman and chief executive, will be Symbian's first chairman.

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* WINDOWS PAIN: Microsoft's new operating system still has some hitches. D9

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