MICROSOFT LURES MOTOROLA FROM SYMBIAN

Barely two weeks after cutting its ties with rival wireless software maker Symbian, Motorola has created a Microsoft Smartphone, the first handset released by a Tier 1 vendor using the Windows-based operating system.

Microsoft and Motorola will announce their collaboration this week, unveiling the Motorola MPx200, complete with scaled-down small-screen versions of Outlook, Media Player and Internet Explorer. Both AT&T Wireless and Europe's Orange have agreed to launch the new GSM/GPRS terminal by the end of the year, indicating that Motorola has been in product development with Microsoft for more than a few weeks.

“This represents a milestone for Microsoft,” said Vince Mendillo, director of the Microsoft's mobile devices division. “It combines our Smartphone platform with the global presence and expertise that Motorola brings, as well as the Motorola brand.”

Samsung also said it will release a CDMA handset with Smartphone, but it has yet to announce a carrier partner.

As a licensee, however, Motorola means far more to Microsoft than another Tier 1 partner. It's a major victory for Microsoft in its battle with Symbian for wireless data mind share. Motorola, along with Ericsson, Nokia and Matsushita, were the original backers of the European Psion spinoff that became Symbian. Motorola sold its stake back to Nokia and Psion in August, however, a day after releasing its first Symbian-based smart phone. To lose Motorola as a customer shows that Symbian doesn't have the indisputable support of the vendor community it once did.

Motorola, for its part, is staying neutral, claiming its divestiture of Symbian allowed it to pursue other technologies its carrier customers demanded. “We're going down this path as licensees only,” said Michael Tatelman, vice president of Motorola's PCS division. “We want to reserve the opportunity to license any other [platform] when the opportunity presents itself.”

The new development pits Microsoft head to head with Nokia, Symbian's biggest proponent and the last major vendor completely committed to the Symbian OS. With Motorola's sale, Nokia now holds a 32% stake in Symbian, which is even greater than the Psion ownership. Nokia's dominance in the handset market may be precisely why Microsoft has an advantage in the OS battle, said Andrew Cole, wireless analyst with Adventis. While vendors are the ones partnering with the two big software developers, the carriers are pulling the strings, Cole said. As long as there are two software platforms on the market, carriers can pit them against each other, basically using Microsoft to check Nokia's dominance.

“The carriers are playing a very shrewd game,” Cole said. “They want to use Nokia/Symbian products, but they're scared that if [Nokia and Symbian] become too powerful, the carriers will lose control over their customers. For that reason, we'll see Microsoft winning a lot more deals.”