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Microsoft, Palm plan new Windows phone

Microsoft and its longtime rival in the mobile software market, Palm Inc introduced a jointly developed cell phone-Tero.

india Updated: Sep 28, 2005 16:16 IST

Microsoft Corp and its longtime rival in the mobile software market, Palm Inc, on Monday introduced a jointly developed cell phone that analysts say could prove a big hit among corporate users.

Verizon Wireless, the No 2 US Mobile service, will be the first to sell the new Windows Treo phone, which will blend phone functions with computer features such as e-mail, Web access, basic word processing, spreadsheet and presentation software. Verizon Wireless is a joint venture of Verizon Communications Inc. And Britain's Vodafone Group Plc.

"We lusted after some of the things (Palm) did well and wanted to combine them with some of the things that we did well," Bill Gates, Microsoft chairman and chief software architect, told a news conference in San Francisco.

Gates said that the Windows Treo device would serve as his primary mobile phone.

Palm pioneered the handheld computing market. But the company has been struggling for the last five years against stiff competition from Microsoft and Canada's Research In Motion Ltd, maker of Blackberry wireless e-mail devices, which have become wildly popular among business professionals.

The "Windows for Treo" phone -- an exact name has yet to be determined -- is based on a phone version of Microsoft software and is powered by an Intel Corp Microchip. The Windows Treo, developed under a strategic alliance with Palm, closely resembles the current Palm Treo 650 in appearance.

Executives from Palm, Microsoft, and Verizon provided limited technical details on the new phones, saying that these would be revealed when the new phone first becomes available early next year to US Customers of Verizon Wireless.

"This is a star product for us," Verizon Wireless Chief Executive Danny Strigl said in an interview, saying the wireless carrier hoped to draw higher-spending customers with the Windows Treo.

The new Treo could potentially open up a much bigger corporate market for Palm, thanks to Microsoft's central role in the desktop computer software and back-office e-mail markets, Palm Chief Executive Ed Colligan said.

"This is about growth and taking this whole category to the next level," Colligan told the news conference. Colligan said the new phone should begin to contribute meaningfully to revenue in Palm's fiscal third quarter ending in February 2006.

But David Linsalata, an analyst with technology research firm IDC, cautioned that by forming an alliance with Microsoft, Palm risked alienating some Palm purists, who had seen the company's go-it-alone strategy as an alternative to Microsoft.

"It has the potential to (increase) their share, but this might lose some Palm die-hards," Linsalata said. The analyst said he wants to know more details about how the Windows Treo phone would be differentiated from other phones using Microsoft software.


Windows Treo phones promise to expand the market for business e-mail users who route their corporate e-mail direct to their phones, Gates said. The potential is some fraction of the 130 million users of Microsoft Exchange e-mail systems.

In addition, executives said the Windows Treo will have innovative features such as the ability to defer incoming calls to voice mail while simultaneously sending a text message reply to the caller -- a way to minimise meeting interruptions.

The companies said that Verizon has the right to sell the Windows Treo phone exclusively for several months before it is offered to other carriers.

Initially the phone is designed to run on a high-speed version of CDMA, the most popular wireless network technology in the United States.

Versions of the phone running on rival technology called UMTS -- which is popular in Europe, Asia and to a lesser extent in North America -- will be available sometime after the middle of 2006, the companies said. International carrier deals will follow.

Palm, based in Sunnyvale, California, in 2003 spun off its PalmSource unit, which makes the software for such devices; but the stand-alone business stumbled. Recently, Japanese software maker Access Co Ltd Agreed to buy PalmSource for $324 million. Palm's Colligan said the company would continue to make handheld computer devices using Palm software.

Microsoft, which is trying to expand its software offerings beyond the desktop computer market, has been pushing to get its software onto mobile phones and handheld devices.

In May, Microsoft unveiled the latest version of its mobile telephone software, Windows Mobile 5.0, with the ability to run miniature hard drives and support new features in cell phones, such as walkie-talkie style "push-to-talk.

First Published: Sep 28, 2005 16:16 IST