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Microsoft Makes CDMA Push

Microsoft Corp. (Nasdaq: MSFT) is making a major push into the North American market, with its first CDMA-compatible mobile operating systems, two new wireless devices, and a buffed-up partnership with Sprint PCS (NYSE: PCS).

Vendors building devices can now get a version of Microsoft's Smartphone OS and Pocket PC handheld computer OS that will run on CDMA and CDMA 1xRTT networks. Previously, native wireless support in Microsoft's mobile operating systems has been limited to GSM/GPRS devices.

"We think that the delivery of this software is the first step in bringing products to a wider audience in North America," Ed Suwanjindar, product manager for Microsoft's mobile devices told Unstrung. He says that by supporting both of the world's major cellular standards Microsoft expects to see a total addressable market of hundreds of millions of units "five or six years down the road."

Samsung Electronics Co. Ltd. (Korea: SEC) and Hitachi Ltd. (NYSE: HIT; Paris: PHA) are the first vendors to announce devices based on the CDMA operating systems. Samsung's i700 and Hitachi's Multimedia Communicator N1 are both wireless handhelds that use the Pocket PC OS. Both will be equipped with onboard digital cameras and are expected to be available later this year.

High Tech Corp. (HTC) also had a CDMA smartphone model, codenamed "Falcon," approved for use in the U.S. market very recently. However, it is not clear if that device uses the latest version of the operating system. "I have no details on that," says Suwanjindar.

Sprint has announced that it will support Microsoft's CDMA push, launching devices later this year. Suwanjindar expects that Verizon Wireless will follow suit, although the operator has not announced anything yet.

The increased commitment from Sprint is a bit of a coup for Redmond. "Sprint PCS had always given Microsoft the cold shoulder," notes Seamus McAteer, of Zelos Group LLC. "It was committed to the Palm platform, but with a new CEO and an eye on Microsoft's promotional budget it may have reconsidered."

Verizon and Sprint did have initial CDMA-based Pocket PC devices, from vendors such as Audiovox Communications Corp. (Nasdaq: VOXX) and Toshiba Corp. (see Toshiba PCS Phone Model 2032). They were available last year, but word has it that the devices weren't running 100 percent Microsoft software. They were also fairly expensive compared to their GSM cousins in both the U.S. and Europe. At one time, the Toshiba device was going for $800!

McAteer doesn't expect the pricing schemes to get much better with the new Samsung and Hitachi devices. "Well, Microsoft isn't going to subsidize," he says. "I think that they'll price these things to be almost competitive with a conventional iPaq [ed note: so probably $500 or so]. There's a fairly substantial market for these things in the U.S. but only a limited market in the European Union -- which is probably why EU carriers are more willing to subsidize." (See SPVs Go AWOL.)

Microsoft says that the pricing is down to the carriers. "We'd love to see the type of pricing that is inviting to the customer and encourages them to try new services," allows Suwanjindar.

— Dan Jones, Senior Editor, Unstrung
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