Market gears up for MS Magneto

But Gates hints at multi-platform world

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Comment The mobile market is gearing up for the launch of the latest release of Microsoft Windows Mobile, codenamed Magneto, in the second half of this year, and for once the company's own marketing machine is more cautious than many commentators. While Gartner Group analysts stated last week that they believed the Symbian smartphone operating system's huge lead would "evaporate" with the launch of Magneto, Microsoft chairman Bill Gates told a press conference at the annual Windows Hardware Engineering Conference (WinHec) that "there will be tons of operating systems".

We have already seen Microsoft, with its recent integration alliances with Symbian and BlackBerry maker RIM, shifting towards trying to dominate the middleware platform rather than, necessarily, the client operating system. This recognizes a trend already fully appreciated by Symbian's main supporter, Nokia, with its heavy focus on positioning its higher level software, such as its Series 60 environment, as a standard platform for enterprise and consumer devices. Three years ago SymbianOS and Windows Mobile – with PalmOS and Linux on the sidelines – were lined up for a head-to-head war. Now that war is increasingly irrelevant, and the battle has become one focused on a broader software platform that is largely neutral to the client device.

The Nokia challenge

Nokia has a headstart in this respect in the purely mobile market, with its highly advanced Series 60 and security platforms, but Microsoft has the enormous advantage of the installed base of applications such as Exchange/Outlook, which will be fully mobilized in Magneto, and the mobile extensions to important products such as Office Live Communications Server.

"Obviously there's a business market where connecting up to Office and Outlook is a very big deal and as we're making Office better we can have the phone evolve," said Gates. But he was respectful of Nokia's strengths in his media conference, and very clearly positioned the Finnish company as the

only challenger to recognize in the mobile space. Other smaller challengers, as the RIM story has shown, can be neutralized through integration deals, luring these suppliers with the promise of access to the huge Exchange base. Gates indicated that the issue is no longer predominantly about operating systems. "You really wouldn't say Symbian, they're really just an ingredient provider to a few people. You really have to say Nokia, because they're the ones who take that and add a bunch of things to it and change it, who create a user interface around it," he said.

Bringing the PC software model to phones

Gates pinpointed the real issue when he said: "the phone is largely becoming a software device", a trend that, of course, should benefit a software company over a device maker like Nokia. But Symbian and the Nokia smartphones have well over half of the admittedly embryonic sector, with Windows hardly to be seen outside of its traditional corporate PDA base, a device type that is in decline. Gates is well aware that Windows Mobile has made almost no headway in the consumer side of the smartphone market, and that to replicate the appeal of the PC, it needs to be a platform that is used interchangeably in the office and at home.

But his solution, though interesting, sounds too long term to fend off the rampaging Nokia in the power consumer market. The heart of the Microsoft vision of a ubiquitous device and interface is automation. "Some of the really interesting stuff, like where you take a photo and it recognizes that that's a sign you want translated or that's an address you want to see a map related to, or it's an expense report so you just OCR it and get it into expense software," he suggested. "The kind of automatic behavior that can come out of deep software running on the phone, that plays to our strength. So we're just at the beginning of our mobile phone thing, because speech recognition, visual recognition, and data is just beginning to be a meaningful thing in terms of phone usage."

These ideas are not unique – they are the focus of mobile R&D for IBM, Nokia, Ericsson and many others. Microsoft's disadvantage will be that - even if Magneto proves to be its traditional 'third time lucky' release and a serious mobile OS after a couple of lightweights – it will be integrating these advanced features into devices well after its rivals and will probably have lost the chance of major market share in handset systems. Its advantage will be its enterprise penetration, which it is aggressively seeking to extend into the carriers, and the chance to incorporate features such as voice and visual recognition into advanced middleware, regardless of how many clients it supports.


The next big dilemma, if we assume Microsoft will shift away from supporting only Windows at the client end, will be whether also to support non-Microsoft ecosystems, notably mobile Java. Gartner's Nick Jones and John Girard believe that the mobile version of Java (J2ME) has been "hijacked" by the operators and pushed as an alternative to SymbianOS or Windows. Although this is true of the platforms devised for carriers like Vodafone in the consumer content space, it misses the fact that one of Symbian's and Nokia's key strengths is also their strong support of Java. This enables them more easily to form integrated partnerships with companies supporting Java at the server level – notably IBM – to deliver server-to-handset mobile enterprise solutions, more comprehensive than the Windows .Net equivalents.

We believe the new strength and functionality of modern J2ME, and its active support by all major platforms except for Microsoft's, is far more significant to the evolution of the mobile ecosystem than the pros and cons of the client OSs. The software technology has taken the high ground, especially in the mobile enterprise sector and the content delivery space. The next big decision for Microsoft will be whether to embrace that technology too in its quest to ensure that its key platforms become dominant in its most important markets, the corporates and the digital media world. Perhaps Gates was giving a clue when he told WinHec: "There will be tons of operating systems. There will always be tons of software stacks in mobile phones."

Copyright © 2004, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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