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Microsoft and Qualcomm in Wireless Pact

Telecom: Joint venture aims to make data such as e-mail available via cell phone. Big carriers are behind effort.


Making its first major push into the growing market for wireless communications, Microsoft Corp. has teamed with wireless phone maker Qualcomm Inc. in a broad venture aimed at marrying the features of mobile phones and computers.

The two companies said Tuesday that they will be equal partners in a separate company, WirelessKnowledge, which will be based in Qualcomm's hometown of San Diego and will be run by executives from Qualcomm.

They did not disclose how much each company will invest in the venture. But according to Pete Peterson of Volpe Brown Whelan & Co., a Qualcomm executive told analysts that each company has contributed $25 million.

Top executives from Redmond, Wash.-based Microsoft and Qualcomm touted the effort as a key development in the struggle to bring seamless electronic mail, Internet access and other computing functions to wireless phones and hand-held devices.

The partnership will initially focus on providing wireless data services to carriers, which will offer the e-mail access and other services to their phone

The two companies said their offspring firm will remain "agnostic" on questions of operating systems and wireless technology choices, even though both Qualcomm and Microsoft are deeply involved in battles over competing technologies in their respective industries.

Nine major wireless operators--including AT&T Wireless, Sprint PCS, AirTouch Communications and GTE Wireless--have joined in the effort, and some will participate in tests of new data services as early as next month.

Those carriers have suffered through repeated attempts over the years to bring data services to mobile phone users. Now, however, they see hope in the WirelessKnowledge effort and other alliances underway.

"This is something that all of our customers have been asking for," said William Lenahan, president and chief executive of BellSouth Wireless Data. "This [venture] is all about making it happen in the industry, and it's about time."

The new venture stemmed from a series of "eye-opening" meetings between Microsoft and Qualcomm that began more than a year ago, according to Microsoft President Steve Ballmer.

Within the industry, the ability to easily transfer data "wirelessly" has long been considered the key ingredient in the takeoff of the emerging market for portable computing devices. Tuesday's announcement, analysts said, is a sign that Microsoft has realized the importance of wireless phones in that equation--and they say the company is readying a late, but extensive, push into the market.

"There were more wireless phones sold last year than PCs, and where is Microsoft in all this? It doesn't exist," said Bob Egan, research director for networking at the Gartner Group in Stamford, Conn. "Wireless data is still a wide-open space, and Microsoft realizes it's behind."

The deal with Qualcomm not only helps Microsoft build an infrastructure that will boost sales for a new generation of portable devices, but it also could give Microsoft an edge in its battle to make those devices run on Windows CE, a version of Windows specifically designed for smaller devices.

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