Microsoft Hedges Its Bet on Wireless Data

If you snooze, you lose. Not if you're Microsoft. In the course of one week, it bought a $600 million, 5% stake in Nextel, paid $5 billion for 4% of AT&T and joined the Wireless Access Protocol (WAP) Forum. The three moves are part of Microsoft's aim of remaining competitive in the post-PC era. The company risked irrelevance when it underestimated the Internet, and its venture into the nascent wireless-data market shows that it doesn't want to make the same mistake twice.

"The existing players -- Ericsson, Motorola, Nortel -- have really tried to set up something that is more Java- and Sun-based," said Andrew Cole, head of the wireless practice at consultant Renaissance Worldwide. "They've made significant progress ahead of Microsoft. But the market is immature, so the game is still wide open."

Although endorsing WAP averts a market-stymieing microbrowser war, the forum wasn't paralyzed by Microsoft's absence. If anything, its decision to join is a tacit acknowledgement of WAP's role in the wireless-data industry.

"It vindicates WAP's position and endorses the hard work they've put in," said Konstantin Zsigo, president of wireless-data consultant Zsigo Wireless.

Wireless data could get a boost just from the Microsoft name, which is familiar to IT managers and consumers alike. Its expertise and product line also could help clear the chronic hurdle of accessing data behind corporate firewalls.

The Nextel deal will give subscribers wireless access to the Microsoft Network portal. That's a curious approach, if only because portals are identified with horizontal markets, while virtually all of wireless data's success stories have been in vertical applications such as telemetry. Even so, a portal could be a good short-term solution for a bandwidth-challenged medium because it reduces surfing by compiling information in one place.

Nextel already has a similar deal with Netscape that will remain largely intact, but this wouldn't be the first time Microsoft has pulled off a come-from-behind win. And it doesn't hurt that Bill Gates and Craig McCaw are principal investors in Teledesic, a $9 billion, low-earth-orbit satellite system aimed at providing Internet access worldwide, and that Motorola is a major infrastructure supplier to Nextel and Teledesic. Those are some big names, but skeptics remain.

"I don't think it's going to have a huge impact on the market at all," Cole said. "The major factors are: Nextel desperately needs cash, and Microsoft is happy because it feels it has a good investment long term in a potentially strong carrier. That's really it."

Although Nextel has been aggressive in providing wireless Internet access, it won't be alone for long. Zsigo told attendees at his May WirelessDeveloper '99 conference that one carrier will equip three of its four phones with microbrowsers by next quarter. And if full-page ads for products such as the RIM 2-way pager in Business Week and other mainstream publications are any measure, this may be, finally, the year of wireless data.