Microsoft Phone Software Runs Hard Drives

By Reed Stevenson

SEATTLE (Reuters) - Microsoft Corp. , on Tuesday released a new version of its mobile phone software with the ability to run miniature hard drives and new features like a walkie-talkie style "push-to-talk."

The world's largest software maker has struggled in the mobile phone world but sees a chance to unseat entrenched rivals such as market leader Symbian Ltd. with Windows Mobile 5.0.

"We've made a heck of a lot of progress," Microsoft Chief Executive Steve Ballmer said in an interview, "I think we've learned a lot." The maker of the Windows computer operating system launched a mobile phones unit about five years ago.

The cell phone market is a fragmented collection of wireless carriers, handset makers and other technology providers that need to work together to deliver closely integrated products and services and Microsoft made a rocky start.

"With carriers launching higher speed networks the business case for more advanced devices is starting to make more sense," said Hugues De La Verne, analyst at researcher Gartner Group.

Microsoft's share of the mobile device software market is estimated at

16 to 18 percent, while Symbian is seen having a 61 to 71 percent market share.

Symbian, created in 1998, is half-owned by Finland's Nokia, as well as handset makers Siemens, Samsung Electronics Co. Ltd. and Matsushita Electric Industrial Co., which owns the Panasonic brand.


Redmond, Washington-based Microsoft said that 40 hardware makers are shipping devices so far using its Windows Mobile software.

In the United States, however, phones running Windows Mobile, which Microsoft calls Smartphones, have been overshadowed by hot-selling devices such as Research In Motion Ltd.'s BlackBerry wireless e-mail devices as well as PalmOS-based phones such as the Treo.

Microsoft said Windows Mobile 5.0 would let e-mails pop up on a user's phone as they arrive. The software will also work with "push-to-talk" features, which allows phone users to chat walkie-talkie style, by pushing a button when they want to talk to another party.

Support for hard drives could also turn phones into multimedia devices that could store music and video, potentially taking the of a separate cell phone and a separate digital music device, such as Apple Computer Inc.'s iPod music player.

Microsoft said that it expects phones running the new mobile software to be offered by carriers within the next few months.

Moreover, faster speeds on cell phone networks also mean that users will have better access to online e-mail, data and content that will provide a stronger incentive for them to upgrade to more advanced phones.

(Additional reporting by Sinead Carew in New York).

Copyright 2005 Reuters Limited.

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