Microsoft and Telefon AB L.M. Ericsson last week announced a partnership to develop wireless Internet applications. The deal is a big victory for Microsoft, which had sat on the sidelines as the world's biggest wireless-phone makers -- including Ericsson and Nokia -- had formed a massive venture called Symbian based on a rival technology.
Ericsson said the Microsoft deal won't affect Symbian, but investors weren't convinced last week. Shares of British handheld-computer maker Psion (quote: PON), whose software is at core of the Symbian venture, plunged as much as 40 percent in London trading Tuesday, though it later recovered.
"This doesn't cut out Symbian, or materially damage it... but it shows Microsoft will not go away," said Andrew Bryant, an analyst with BancBoston Robertson Stephens. "Stock markets had started to bet that Symbian had won over Microsoft. This announcement shows it's too early for that."
The deal was followed up Tuesday by an agreement by Motorola, another Symbian member, licensing 3Com's Palm OS for wireless technology. But as with the Ericsson-Microsoft alliance, industry observers downplayed the impact on Symbian's fortunes.
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