Compaq drives WAP deals with handheld subsidies

Compaq is clawing its way into the PDA market on the back of WAP. The company has stitched together cut-price hardware deals with mobile operators in Germany, and now looks set to roll out subsidised WAP/Compaq hardware bundles with operators in other European countries.

Hewlett-Packard is ready to follow suit in the subsidised handheld game: HP in Germany confirmed to The Register that it is planning on bundling the Jornada 680 and 540 series along with products from Deutsche Telekom's T-Online and T-Mobile divisions. HP was unable to confirm if this will establish a trend for the rest of Europe.

Mobile operators in Germany, such as e-Plus (four million subscribers) and D2 (ten million subscribers) were the first in Europe to negotiate with Compaq subsidies for handheld or Pocket PCs to drive the use of WAP services.

The Register has discovered that Compaq is now negotiating similar deals with major mobile telephone operators in Norway and other European countries. "Compaq co-operated early with telecommunications network operators because it's important to us to build on a unique position we have with them. Eight out of ten telecoms operators in Europe are using a Compaq solution for customer billing and management," says Gerhot Radl, Compaq's Business Development Manager for Handhelds in Mnich.

Euro subsidies

The German subsidies reduce the cost of a bundled service and hardware package from DM GBP 477 to 318. A bundle includes a Siemens mobile phone that acts as the data modem, the Compaq Aero, a credit for air time, and a few software drivers. It is a clunky solution for mobile data, as it requires the user to connect the mobile phone to the handheld via a cable. A user needs to carry two devices.

However, for usability and screen size, it may be superior to the current Psion/Ericsson or the Nokia 7110 solutions for accessing WAP services. Computer magazine Chip, evaluated all three solutions earlier this year, and gave the Compaq/Siemens solution highest marks.

New bundles being developed will be based on Compaq newest handheld, the iPaq H3650 (which is not shipping yet - UK will get it first in mid-June, Germany and France in July). It is a handheld whose functionality can be extended by sliding it into an sleeve that acts as an expansion slot. There are two jackets announced now, one with a PC Card slot and one with Flash Card slot that supports Ethernet and Bluetooth cards.

Compaq calls the sleeve a "jacket".

Users can plug one of the new GSM modem PC Cards into the PC Card jacket, such as Option's FirstFone. It's one of those ones with the little aerial sticking out of it. Nokia also offers one of these GSM modem PC Cards, called the *CardPhone 2.0 but it is not shipping yet. Radl says Compaq is "working on the Nokia CardPhone compatibility issues with the iPaq".

"These jackets are for early adopters of mobile data. Eventually, Bluetooth and GSM will be integrated in handhelds," says Radl.

This idea of snapping on or slipping into accessories is a growing trend. Ericsson is doing it with accessories for mobile phones and Handspring with Palm devices in the US.

Unusual

Compaq's move is a bit of a surprise to market analysts. "Frankly, this is not the usual way the industry works. Subsidies are usually applied to products that have become a commodity," says IDC Research Analyst, Catherine Pennigton, who tracks the handheld market.

Maybe the mobile operators realise that they will have to give subscribers a better solution for viewing WAP pages than the small screen phone. Or maybe mobile operators have realised they have a pretty lacklustre track record in marketing wireless data and mobile Internet services. That is where the computer vendors come in. "The mobile operators don't know much about data but we do," says Radl.

"Compaq wants to deliver product from end-to-end to the mobile data market," says Radl.

With the handheld, Compaq will have a foot (or hand-held, so to speak) in the door for the more lucrative back-end infrastructure, servers, and software, which is a market that it clearly wants.

Even without the bonus of being able to sell more servers and systems, for the likes of HP and Compaq, the mobile data terminal market represents a huge opportunity, for Palm, Symbian, and Psion too. Analysts say that Notebook PCs are expected to dominate the wireless data market initially, but that handheld will also get a chunk of the market. Recent forecasts by Ovum show the value of cellular handheld terminals growing from GBP 254 million in 1999 to GBP 10 billion in 2004.

• According to Nokia, CardPhone supports up to 43.2 kbps. It is the only device right now that can be used to access the faster-than-GPRS-and-current GSM-but -much-more-expensive mobile service, known as HSCSD, which is to be offered by Orange in the UK later this summer and is already on offer in Switzerland, Germany, and Sweden. The HSCSD speeds available depend on how the network operator deploys the service. Since the speed depends on bundling more than one channels, if the throughput is twice or four times 14.4 then you will likely pay twice or four times as much, unless operators get creative about billing for HSCSD. Is your network operator known for creativity and encouraging network use? ®