Microsoft SmartPhone Stumbles as Key Player Abandons Platform

One of Microsoft's primary SmartPhone partners abruptly scrapped plans for cell phones designs based on Microsoft's software and will instead license cell phone software from market leaders Nokia and Symbian. The decision by UK-based Sendo came as a complete surprise to Microsoft, which had been using the Sendo Z100 "Stinger" phone to tout SmartPhones at recent trade shows and other technical events. Sendo later said that it chose the competing platform because it uses open cell phone standards that support Java and multimedia messaging capabilities.

"It has been a very difficult decision for Sendo given its leadership position in the development of smart devices," the company wrote in a statement issued over the weekend. "We are disappointed that we will not be able to ship the Z100 given the high level of interest shown in the device." Microsoft found out about Sendo's decision on Thursday. "We're disappointed by the news that they've decided not to commercialize the Z100 SmartPhone device," said Vince Mendillo, Microsoft vice president for worldwide product marketing for mobile devices, downplaying the effect of the bad news. "This is a small speed bump on the road."

Over the weekend, however, arguments about the Sendo defection grew more heated. Sendo CEO Hugh Brogan described Nokia's software as "robust, yet uniquely flexible, bringing great benefits to licensees, operators, developers and consumers," causing Microsoft Ed Suwanjindar, product manager of Microsoft's mobile devices division, to say he was "baffled" by the Sendo decision. Java, Suwanjindar, is easily added to the SmartPhone, and the product has integrated support for multimedia messaging already. "Nokia is trying to be all things to all people: A software provider to its hardware competitors, a handset company and portal for end users, an infrastructure company for carriers, \[and so on\]," Suwanjindar says. "At the end of the day, Nokia is a competitor to Sendo and every one of its Series 60 licensees in the hardware arena. We're not."

Sendo's CEO also noted that the Nokia platform includes a source code license, letting the company customize its devices more easily. But Anne Marie Duffy, a UK wireless and mobility manager at Microsoft, says that argument is ridiculous. "\[SmartPhone licensee\] Orange has a fully customised \[SmartPhone\] with no problems," she says. "\[And\] Sendo already had access to source code for the SmartPhone operating system. Under the terms of the agreement a full set of APIs was made available." Furthermore, she notes, Sendo never discussed source code issues in two years of work together. Two years, she says, during which time Sendo missed deadline after deadline.

Countering arguments that the Sendo switch has the fledgling SmartPhone reeling, Suwanjindar said that hardware makers Samsung, HTC and Compal and still bringing SmartPhone designs to market, and that wireless carriers Orange, Vodafone, AT&T Wireless and Verizon Wireless have all pledged to support the designs. "Microsoft is comfortable competing with Nokia or anyone on the merits of our software," Suwanjindar said. "Natural selection will occur: May the best software win."

Of course, the best software doesn't always win. In a market like that for smart cell phones, where Microsoft is still a bit player, the company's software clout hasn't generally translated into better sales. Microsoft has struggled for years with its interactive TV software, for example, because of resistance on the part of established cable companies and hardware makers to let the software giant hone in on their market.

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