Microsoft hopes to create buzz for Stinger

Microsoft is moving into the handset-making business, hoping to give more bite to its Stinger operating system for "smart phones"

The software maker will announce on Monday that it invested an undisclosed sum in Sendo, a UK-based handset maker that is one of the four companies developing prototypes for a combination cell phone and personal digital assistant that will run on Microsoft software, company executives said.

Phil Holden, Microsoft's mobility group director, said the investment in Sendo will give Microsoft a little more control over development of Stinger phones and will bring them to market even faster than the projected sales date of sometime next year.

"It'll give us the ability to work even closer on development and hopefully bring the product to market very quickly," Holden said.

But just when that might happen Holden won't say. Prototypes of the phone are in trials, or soon will be, with three American carriers: AT&T Wireless, Cingular Wireless and VoiceStream Wireless, he said.

Stinger is Microsoft's code name for its software that will run on a family of smart phones -- a class of wireless phones with oversized displays and colour screens -- designed for wireless Web access and conventional phone calls. The product has been in the works for two to three years and will be marketed by Samsung in the United States and Europe.

But analysts say that while Microsoft's investment in Sendo may help speed the phone to market, it doesn't buy partnerships with the larger cell phone makers like Motorola, Nokia or Ericsson that are necessary for Stinger's success. So far, none of the big three phone makers, which combined sell about 70 percent of the world's phones, has inked a deal with Microsoft.

Sendo is also relatively unknown in the handset manufacturing circle. It was founded in August 1999 and has its headquarters in Birmingham. The company is just now starting to introduce a line of phones in Europe and Asia.

The company does have a different way of doing business. In general, European handset makers produce phones independently of carrier input. But in North America, carriers and handset makers work on developing the phone together. Sendo has what is considered a North American model.

"Sendo has yet to materialize as a big player and certainly (is) not a player at all in the United States market," said Jupiter Research wireless analyst Dylan Brooks. "Microsoft has the best chance of penetrating its home market with partnerships from Nokia, Ericsson or Motorola."

Stinger, like other Microsoft technology currently under development, also ties into the company's .Net technology for delivering software and data as a service to PCs, cell phones, PDAs and other computing devices. Stinger represents part of Microsoft's strategy for delivering information to cell phones and other wireless devices through Internet servers using Microsoft products and services.

The phone's design, which resembles many of the higher-end phones available on the market today, includes a much larger display than typical phones. Expected to be available with a choice of monochrome or colour display, the phone uses Microsoft's Mobile Explorer software to surf the Web and access personal information stored on servers and directly on the phone.

Stinger is also one more hedge for Microsoft against the waning influence and popularity of the PC. Microsoft reasons that smart phones and other devices will augment, rather than replace, the PC.

Last Thursday, as part of the company's quarterly earnings announcement, Microsoft executives warned that profit and revenue would likely fall below Wall Street estimates in its current quarter, as demand for PCs continues to weaken.

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