Microsoft's Mobile Maneuver

BusinessWeek analyzes Microsoft's dogged persistance to conquer the mobile arena and some of its recent moves to stake a bigger claim. In addition to pushing its Windows Mobile platform, the company is now "chasing an even juicier prize: central position in a whole spectrum of mobile applications, from portable music, to wireless e-mail and messaging, to mobile TV." Ben Wood at Gartner said, "Microsoft has realized that, at the end of the day, it can't make much money from selling operating systems for handsets. Instead, it's now looking at an even bigger opportunity."

Next to Nokia, Microsoft has been making a whole lot of noise at 3GSM in Barcelona so far announcing push-email partnerships with Vodafone, Cingular, Orange and T-Mobile, a mobile music one with Motorola, and the acquisition of mobile search firm MotionBridge. So far Microsoft has made little headway in the smartphone space. According to Canalys, "Windows was used in less than 5% of smartphones."

The article notes that revenues from Mobile OSes probably won't amount to much. Charles DiBona at Sanford C. Bernstein & Co. thinks Microsoft's strategy isn't to make "money off phone operating systems," but "rather, it's to sell servers, and to provide key technology, such as digital rights management, so that those become standards."

He said, "It's hard to sell in enough volume to make a dent in this company. Mobile won't be a monster product category for them." According to the article, Microsoft's Mobile & Embedded Device Div. "was the smallest of the company's seven business units, contributing just $101 million of the outfit's $11.8 billion in sales." DiBona pointed out that deals aimed at selling other Microsoft technology show "they are headed in the right direction now."

Microsoft also jumped into "the year's hottest new fad, mobile TV," by partnering with Virgin Mobile and BT to provide technology for Virgin's new mobile TV service based on Digital Audio Broadcast technology.