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Microsoft Aims To Lead Smartphone Market Within Three Years

The company is promising something that seems counterintuitive: a complex suite of features in a smart phone that's cheap and easy to use.
Microsoft has moved to address this demand for additional features in the latest rollout of Microsoft's Mobile 5.0, he said. Released last month, version 5.0 is looking to woo IT managers away from Research in Motion's popular BlackBerry service by integrating a push email system. However, the architecture used by Microsoft, Zhang said, employs a more direct approach for linking users with email, cutting out the proprietary servers used by RIM as part of their service package.

"There is no middleware, no server... that impersonates you to get all your data that is then passed through a network center to the device. That is a zigzag approach. We are also cheaper. You don't have to pay for the server and the user doesn't have to pay the service fee," he said. "It is also more secure. RIM has to use a lot of encryption along the way because data has to be directed to multiple places. In our case, there is only one set of encryption you need to use, from your server to the device. And we use a standard encryption protocol: SSL. We don't need anything else."

RIM, which has 3 million subscribers worldwide, declined comment regarding Microsoft's claims. Although the two are rivals, they cozied up to each other earlier this year in a deal that delivers enterprise-class instant messaging to RIM users and also lets them check on the presence of others in the corporate network — all through Microsoft's Office Live Communications Server 2005.

Zhang also said Microsoft is on track to make smartphones a device for the middle-class masses. "There is a misconception that all smart phones are expensive. In the very beginning, yes, smart phones were expensive, power hungry and bulky; that was probably two or three years ago," he said. "But if you look at the products that we had in the last year or so, it is very different. The devices are as small and as cheap as a regular feature phone, around $199 (with subsidy)."

Zhang believes the deal Microsoft struck with manufacturing services provider Flextronics earlier this year will drive the cost even lower. The platform, dubbed Peabody, will reportedly be based on the OMAP730 GSM/GPRS processor from Texas Instruments, and include 32-Mbytes of RAM and 64-Mbytes of flash memory. It will also include a 1.9-inch color LCD with a resolution of 176 x 220 pixels, USB and IrDA ports and a miniSD slot. A 1.3 megapixel camera is optional. The first devices should come on the market in 2006, Zhang said.

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