Having been ruled a monopoly and found guilty of violating federal antitrust laws to maintain that status, Microsoft now faces an uncertain future as federal courts determine how best to provide relief to competitors harmed by its actions, as well as deal with a lengthy appeals process.
But for all the concern when Microsoft first turned an eye to the wireless market, the wireless industry apparently needs no federal regulation to protect it from the company’s behavior in the future. According to company executives, Microsoft is more concerned about having its back-office applications used on wireless devices than it is interested in having its computing platforms power those devices.
At the heart of Microsoft’s legal problems is how it used the popularity of its Windows operating system to push its Internet Explorer browser software into desktop PCs. But the wireless industry has largely rejected the thinned-down version of Windows Microsoft designed for smaller, consumer electronic devices-Windows CE-rendering it an ineffective vehicle for taking Microsoft wireless.
“I think vendors are putting too much emphasis on WinCE,” said one Microsoft official who agreed to speak anonymously. “From Microsoft’s point of view, we don’t care what device you use, we want you to connect to the Outlook server on the back-end.”
Microsoft has been slowly forming partnerships with wireless carriers for just this purpose. The most recent and telling example of this strategy was the Microsoft, AT&T Wireless Inc., British Telecom plc collaboration announced late last month. The alliance gives Microsoft access to AT&T’s and BT’s wireless systems, development resources and expertise to wirelessly enable its applications.
In addition to its back office applications, Microsoft is concerned with getting its MSN.Mobile wireless Internet portal on wireless devices as well. Again, the thought is to get Microsoft content on wireless devices, not necessarily Microsoft software.
The reason, according to the Microsoft official, is that smaller devices don’t provide much in the way of licensing revenue.
“On a device that’s $99, do you think anybody can charge more than $5 for licensing the operating system on the device? Where’s the money?”
Instead, the idea is to make Microsoft back office software more valuable by enabling it for wireless use. The company believes thin devices like wireless handsets will remain complementary items to the desktop, not replacements to it.
“Microsoft’s most important strategy is to protect our server business,” the official said. “There is a very strong belief in the company that the desktop market will not go away. It may not serve the same function as today, but you need some kind of anchor to store your data. The thin devices will be connected to it.”
Part of this strategy includes its browser technology, the dual-mode Mobile Internet Explorer-which features support for both Hypertext Markup Language and Wireless Application Protocol technology.
“The browser controls how much information you can view and thereby controls the service, the content,” the Microsoft official said.
WAP-centric microbrowsers have proven the rage of late, with pure WAP-based microbrowsers from Phone.com Inc. and Nokia Corp. dominating the market. That Microsoft has backed the WAP standard is a sure sign of the technology’s success to date. But Microsoft has not placed all bets on it.
“WAP is the standard for the current technology, but not the future technology,” the official said, adding that WinCE and Mobile Internet Explorer are designed more for where it expects wireless networks to be in the future, not where it is today.
“We’re definitely playing catch up,” the official admitted. “But we’re in this for the end-game … If I told you Microsoft knew exactly what it was doing in wireless, it’d be a lie. We’re experimenting. Since we can afford it, we’re backing every different standard and path to see what survives.”
Specifically, the official said Microsoft expects WinCE to play a greater role when General Packet Radio Service and third-generation networks are implemented, which enable more robust wireless Internet applications and therefore will require a more robust operating system.
“Why would you choose to download text only if you could download the whole Web page?”
The emergence of the Internet on the wireless scene has increased the pace of innovation to the point where it is no longer acceptable to work on a solution for today’s problems. To compete, companies must determine what solutions will be needed years from now and be there to provide them.
In this new environment, Microsoft is just as vulnerable to change as any other company. As the anti-trust court case against Microsoft now moves into the penalty phase and the government determines a way to level the playing field for Microsoft competitors in the desktop market, Microsoft and its competitors in the wireless market are on even ground.
“The wireless market is not only level, it’s wide open,” said Rob Enderle, analyst at Giga Information Group. “There is no existing trend that we can identify that suggests Microsoft will, or even can, move into a dominant position in this space based on current initiatives,”
The manufacturers that make up the Symbian initiative banded together around the EPOC operating system from Microsoft competitor Psion plc. largely to avoid being dependent in any way on Microsoft, Enderle said, given its bullying reputation. Since its formation, Symbian has dominated the platform market for future feature phones.
Phone.com remains the leader in the microbrowser market. While questions about WAP’s future remain, the technology could easily evolve along with the wireless industry to remain a significant challenge to Microsoft in the future. In fact, some speculate Microsoft’s only chance to compete in the microbrowser space is to buy Phone.com.
As for the applications Microsoft is so concerned about having access on wireless handsets, even Microsoft believes it may face challenges from as-yet unknown sources, given the fact that many of its pioneering executives have left to head start-up firms dedicated to this exact space.
“In this kind of wireless playing field, any start-up can now offer a challenge to anybody, Microsoft or Nokia,” the Microsoft official said. “Look at how many wireless incubation funds are popping up, dedicated to wireless Internet start-ups. One of them can be the Yahoo! of wireless.”
