Microsoft profits from death of Odin

Psion's (quote: PON) announcement Thursday that it would drop a planned wireless handheld computer is ultimately a win for Microsoft, leaving it with less immediate competition in the wireless handheld market, industry experts say.

The Psion project, code-named Odin, was originally being co-developed with mobile phone handset maker Motorola. Motorola pulled out of the project last month, and Psion said it would not go on with the project on its own. The project would have been based on a platform called Quartz from the Symbian smartphone consortium.

Microsoft Pocket PC handheld computer operating system is already being built into wireless handhelds from Sagem and other manufacturing partners.

"[Odin] was the only Symbian device announced that would compete with Pocket PC in voice-integrated devices," said Tim Mui, research analyst with IDC. "This definitely puts Microsoft in a better position."

This spring Nokia is releasing the 9210 Communicator, based on Symbian's "Crystal" reference platform, a mobile phone that opens out to reveal a keyboard and colour display. Ericsson is already selling the R380 smartphone, which is also based on the Symbian platform.

Some Microsoft competitors will have wireless handheld devices on the market in the first half of this year, but there are few alternatives to the Stinger smartphone using Pocket PC.

Palm Computing, the biggest US handheld maker, and Handspring, which licenses Palm's operating system, are both working on plans for wireless handhelds with integrated voice. Handspring released VisorPhone, which adds wireless and voice capabilities to existing handhelds, in the US in December, and will sell a European version by mid-year. Two companies, Ubinetics and RealVision, are about to release attachments for the Palm V series which add voice and wireless data.

Palm is rumoured to be planning a hardware-expandable version of its m100, called m505, and a colour Palm V for later this year. The expandable platform would open the way to a voice attachment similar to VisorPhone.

Symbian says its licensees will make both pen-based wireless handhelds and smartphones, but no such products have been announced yet. Nokia has said it plans to make devices to all three of Symbian's reference designs, but has not specified a time frame.

Nokia is the most ambitious of the Symbian licensees, and has said it aims to be the Microsoft of the 21st century, all of which may have Microsoft worried. "You will see Nokia running all those platforms, it's just a question of when," said IDC's Mui. "It's a question of how important is first to market?"

He noted that Nokia, like Ericsson, provides much of the infrastructure for wireless network operators, which automatically gives the company a boost in establishing its smartphones in the market. In addition, analysts say the smartphone market will not really take off until the introduction of GPRS, which won't be widely available until late this year.

Psion's announcement raises questions about the company's future. Psion does not make handhelds that compete with Palm and Pocket PC, and experts say the keyboard-based handheld will probably remain a specialty market. IDC estimates the market for Palm-type devices is growing at about double the rate of keyboard-based handhelds.

The company's falling stock price has added fuel to industry rumours that Palm could even buy Psion in order to gain control of the EPOC operating system at the heart of Symbian. Psion, Nokia, Ericsson and Motorola lead the Symbian consortium, which uses the EPOC operating system designed by Psion for its handheld computers.

If Symbian is successful, Psion's stake in the group could be the key to its future success. "They say they're investing £20m into Symbian. Their focus could become more on the operating system," said analyst Mui.

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