• Sidebar: Levels of MSN Mobile Service
• Illustration: MSN Mobile and MED Group Organization

Recent deals between MSN Mobile and two providers of mobile phone software, Openwave and Qualcomm, illustrate Microsoft's multipronged approach to the mobile phone market: Microsoft's Mobile and Embedded Devices (MED) Group oversees the Windows Mobile platform and is focused on business users, while MSN Mobile offers a mixture of services for consumers on a broad range of phones, including phones based on non-Microsoft technology. The two groups will probably continue to operate autonomously unless the MED Group achieves greater platform success.

What Is MSN Mobile?

MSN Mobile is the brand name for a set of Microsoft-hosted services for wireless phones. It began with Microsoft's 1999 acquisition of Omnibrowse, a provider of one-way data such as news alerts, stock quotes, and sports scores to mobile phones or pagers. Today, MSN Mobile services include personalized headlines; news, sports, stock, and other alerts; one-way (receive-only) and two-way access to Hotmail and the .NET Messenger service (sometimes known as MSN Messenger); and access to other content from MSN and partners.

Some of these services are available to any user in a given geography with the right type of phone, while others require specialized clients and are only available through specific carriers. Because MSN Mobile's carrier partners employ many different wireless technologies, handsets, and pricing models, and because they serve markets with different demands—for instance, wireless text messaging is much more common in Europe than North America—the feature set, pricing, and revenue picture for MSN Mobile varies widely by geography and carrier.

(Types and levels of service that MSN Mobile offers are described in the sidebar "Levels of MSN Mobile Service".)

Deals with Microsoft Competitors

Although MSN Mobile shares the same broad mission as Microsoft's MED Group—enabling access to information anytime, anywhere, on any device—and both market their wares to wireless carriers, the two groups have different business goals, operate more or less autonomously, and are in different parts of the company. (See the organization chart "MSN Mobile and MED Group Organization".)

Prime examples of this autonomy are the deals, announced in Mar. 2004, between MSN Mobile and two wireless middleware providers, Openwave and Qualcomm. The deals make it easier for carriers to offer MSN Mobile services, despite the fact that both vendors compete with other Microsoft products.

Openwave is best known for its Wireless Access Protocol (WAP) browser, which was introduced in 1997 as the UP.browser and has shipped on more than 500 million phones, according to the company. (Openwave has gone through several name changes, including Unwired Planet and Phone.com.) Today, the company offers a wide array of development tools and applications for mobile handsets. Although Openwave does not itself offer an OS for mobile devices, its tools and applications support many embedded OSs, including Linux. This runs counter to the goals of Microsoft's MED Group, which is trying to sell the Windows Mobile platform to carriers and convince developers to build mobile applications using the .NET Compact Framework.

Qualcomm is best known for commercializing the Code-Division Multiple Access (CDMA) standard for digital wireless voice connectivity and selling CDMA-based chips and handsets, but it sells many other wireless products as well. Qualcomm and Microsoft have partnered in the past: their Wireless Knowledge joint venture, which lasted from 1998 to 2001, culminated in Microsoft's Mobile Information Server (MIS), an enterprise product for giving wireless access to corporate resources. (MIS was discontinued as a stand-alone product and its functionality was absorbed by Exchange Server 2003.) Introduced in 2001, Qualcomm's Binary Runtime Environment for Wireless (BREW) is a middleware platform for creating applications for mobile phones. As with Openwave’s products, applications written with BREW can run on phones with different OSs.

MSN Mobile announced in Mar. 2004 that it has built specialized clients that will run on phones using Openwave's Phone Suite Version 7 or Qualcomm's BREW platforms, offering end users two-way access to Hotmail and .NET Messenger. These clients will encourage carriers to offer access to these services by eliminating the cost to carriers of building the clients themselves. However, carriers will still have to choose to offer these services—they will not automatically appear on every phone using Openwave or Qualcomm software. Microsoft expects phones with the new clients to ship by the end of 2004.

Different Product Groups, Different Markets

MSN Mobile's deals with Qualcomm and Openwave are not the only examples of Microsoft's multipronged approach to the mobile market, as the following examples illustrate.

Windows Mobile Start Service. In Dec. 2003, the MED Group worked with AT&T to create the Windows Mobile Start Service, a Web site for AT&T customers to set up and customize their Windows Mobile-based Smartphones. MSN Mobile had no part in this service, despite the fact that it has experience establishing joint Web sites with telecom partners, such as the "VZW for MSN" Web site for Verizon wireless customers.

MSN Direct. In Jan. 2004, Microsoft launched MSN Direct, a one-way wireless information service for Smart Personal Objects Technology (SPOT) watches. This service might be considered a third prong of Microsoft's mobile strategy—it was built entirely by the SPOT team, which is part of the Windows division, and neither the MED Group nor MSN Mobile was involved, despite both groups' history of developing software and services for mobile information devices. Moreover, the demand for SPOT watches seems to overlap with the demand for the lowest level of MSN Mobile service.

This is not uncommon: when Microsoft enters an emerging market, it often lets multiple product groups approach that market from different angles. For example, in the 1990s, Microsoft perceived an opportunity in interactive TV and pursued multiple lines of entry. On one hand, it tried to sell consumer hardware and specialized services such as WebTV, which let users surf the Internet from their TV, and UltimateTV, a digital video-recording device and service. On the other hand, it tried to sell the Microsoft TV (MSTV) platform to cable TV operators as a foundation for building their own interactive applications. In the end, neither business proved notably successful, and strategies for both have been substantially revised.

Similarly, MSN Mobile (and MSN Direct) are aimed at the broad consumer market, while the MED Group is focused on business users and technology enthusiasts, who are more likely to use a smart phone (defined as a phone with a graphical user interface and significant offline capabilities). Although smart phones make up only about 2% of all phones shipped today, demand is growing quickly—IDC reports that global sales of smart phones doubled to 9.6 million in 2003, while total shipments of wireless phones grew 23% to 533.4 million.

These product groups are likely to remain autonomous until one business achieves significantly greater market penetration, at which time it could subsume the others. In particular, the MED Group’s Windows Mobile platform is gaining presence in the market for smart phones —IDC reports that 459,000 Windows-based phones shipped in the fourth quarter of 2003, putting Windows ahead of Linux and Palm in that category, although far behind the more than 2.5 million Symbian phones shipped. Meanwhile, Microsoft has never reported user numbers for MSN Mobile, suggesting that the service is not widely used. If demand for Windows Mobile continues to grow, Microsoft could move MSN Mobile into the MED Group and use the platform's popularity to promote the services.

Resources

MSN Mobile is at mobile.msn.com.

For recent news on Microsoft's mobile platform, see "Windows Mobile 2003 Gets Display Tweaks", and "Smartphones Debut in North America" on page 22 of the Dec. 2003 Update. A broad view of the Microsoft's mobile platform strategy can be found in "Wireless WAN Strategy Takes Shape" on page 14 of the Nov. 2002 Update.

Exchange 2003's capabilities for mobile users, including how it incorporates features formerly in MIS, are described in "Improved Support for Mobile Exchange Users" on page 11 of the Mar. 2003 Update. News of Microsoft's withdrawal from Wireless Knowledge is reported in "Investment Update" on page 19 of the Jan. 2002 Update.

The change in Microsoft's TV strategy is described in "TV Division: Back to Basics" on page 22 of the June 2002 Update.

Openwave's development tools page is at www.openwave.com/us/products/mobile/device_products/phone_suite.

Qualcomm's BREW page is at brew.qualcomm.com/brew/en.