Microsoft Smartphone Hits T-Mobile Snag

In a blow to Microsoft’s plan for world phone domination, Deutche Telekom’s T-Mobile wireless division Thursday said it would postpone the planned launch of its new smart phone handset based on Microsoft’s Smartphone software.

The news comes as wireless carriers in Europe, Asia, the U.S. and elsewhere around the world consider which mobile operating system to incorporate in a new generation of wireless handsets capable of more robust applications.

Microsoft has repeated its interest in becoming a major player in the emerging market for wireless operating system software, but has yet to garner significant market share and appears to be facing continued technical issues.

The Wall Street Journal Friday quoted a T-Mobile spokesman as questioning the quality of the Microsoft product. Reliability, security and overall product performance are at the heart of the decisions that carriers will consider, as they assess Microsoft mobile software system.

Microsoft is working with HTC Corp. of Taiwan on the new smart phone handset, which T-Mobile and other wireless carriers are likely to put on sale by later in 2003.

The delay is not only a setback for Microsoft, but a welcome development for Nokia Corp. , which is leading the market for software that runs more advanced wireless handsets. Nokia and Microsoft are in a race against each other to provide the leading software system to drive applications for wireless carriers worldwide.

International Data Corp. says that Nokia supplied 57 percent of the 1.7 million smart phones shipped worldwide in the first quarter. The new handsets use software Nokia developed along with the Symbian consortium. Siemens AG and Samsung Electronics Co., have already said they plan to begin marketing advanced wireless handsets based on the combined Nokia-Symbian software later this year.

Meanwhile, Microsoft is said to have less than a tenth of the smart phone software of all advanced wireless handsets in the first quarter. Orange SA launched the first phone running Microsoft’s Smartphone software in October, and says it plans on releasing an improved version of the handset with less glitches and better battery life.

There have been reports that trial versions of Microsoft Windows Powered Smartphone software often froze up, forcing the user to reboot.

Nokia, Symbian and Microsoft are taking on a complicated task in integrating hardware and software for engineering in the wireless environment. Then there is the problem of testing, adding new applications and services, all of which have to be interoperable.

Microsoft already has agreements with more than 25 handset manufacturers to carry handsets based on its software, mostly Pocket PC and Pocket PC Phone Edition systems. Microsoft is banking a lot on its planned deal with AT&T Wireless , and if it were not able to iron out the kinks in the hardware and software, losing that deal could be a big problem.

And while the economy continues to struggle, T-Mobile USA on Thursday
Said posted a narrower quarterly net loss and reported a 34 percent jump in
revenue as it added more customers than any of its rivals.

T-Mobile, the smallest of the six national operators in the U.S., said its
net loss for the first quarter narrowed to $216 million from $4.2 billion a
year earlier. Revenue rose to $1.79 billion from $1.18 billion as it added
921,000 customers to its base. It ended the quarter with about 10.8 million

One reason for the spike in business, the Bellevue, Washington-based company said was the newfound popularity of its camera phones, which allow users to
take photos with their cell phones and send them to friends and family over
the network.

T-Mobile currently offers a phone with an integrated camera for $99.99 after
a rebate. T-Mobile also offers one of the least expensive deals for monthly subscriber plans.

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