Microsoft and Ericsson Form Joint Venture for Web-Connected Smart Phones

Microsoft Corp. and Swedish mobile phone maker Ericsson AB are joining forces to create a new generation of Web-connected mobile phones for business. The joint venture, based in Sweden, will design "smart phones" that allow business workers to connect directly to corporate networks, email systems, and other business data. The new phones, expected in early 2001, will use Ericsson's mobile communications technology and Microsoft's Mobile Explorer Web browser.

Key Takeaways:

• The joint venture will design smart phones that enable seamless communications between office environments and cellular carrier networks.
• Ericsson will hold a majority stake in the venture, which aims to capitalize on the rapidly growing market for wireless Internet devices.
• The new phones will not run on Windows CE, a stripped-down operating system that has failed to gain widespread acceptance.
• A recent study by the Yankee Group predicts that Web-enabled phones will attract 48 million users by 2002.
• Microsoft's late entry into the market is being downplayed by analysts, who see the joint venture as a strategic move to position the company for future success.
• The new alliance with Ericsson is part of a broader scramble by technology companies to gain an early lead in the wireless Internet device market.
• Nokia and Ericsson are also partnered with Motorola to develop an operating system named Epoc for mobile phones with Web access.
• Microsoft's use of its browser instead of a full operating system represents a notable departure from its previous strategy, which emphasized Windows CE for handheld devices.

Statistics:

• 48 million users are expected to adopt Web-enabled phones by 2002, according to a recent Yankee Group study.
• The joint venture aims to capitalize on the rapidly growing market for wireless Internet devices.
• Microsoft's Mobile Explorer Web browser will be used in the new smart phones.
• The new phones are expected to be released in early 2001.

Sources:

• Associated Press, "Microsoft to form joint venture with Ericsson for Web-connected phones," no date provided
• Yankee Group, "Wireless Internet Devices: A Market Research Study," no date provided
• Forrester Research, no specific publication or date provided
• Microsoft news release, "Microsoft and Ericsson form joint venture to create new generation of Web-connected smart phones," no date provided
• Ericsson news release, "Ericsson and Microsoft form joint venture," no date provided