Microsoft expanding in cellphone biz

Microsoft is planning a series of new programs and services for cellphones, responding to stiff competition from Apple and other rivals. The offerings will include an online bazaar for distributing software to phones that run Microsoft's Windows Mobile operating system. Such services have become an important complement to advanced cellphones since Apple introduced its iPhone App Store last year.

In coming weeks Microsoft also will offer a new version of the operating system, called Windows Mobile 6.5, that provides a more-sophisticated interface and could further narrow the gap with the iPhone.

Microsoft needs to energize its mobile strategy as web-enabled smartphones take on many chores associated with computers and take a bigger share of the overall cellphone business. Although it was one of the earliest computer-industry entrants in the smartphone business, Microsoft is widely perceived to have lost technological ground to Apple's iPhone and Google's Android software, both of which are particularly good for calling up Websites.

Even Palm, a smartphone pioneer that stumbled badly in recent years, is grabbing attention with new mobile software and a device called Pre, due out later this year. Microsoft's share of the smartphone business increased to 13.3% last year from 11% the prior year, but Apple tripled its share during the same period, rising to 9% from 3%.

One factor is that Microsoft focused largely on business functions such as easy access to corporate email systems, though smartphones stopped being seen by many users as purely work devices. Company executives have said they plan to place a much greater emphasis on multimedia and other functions of interest to consumers, such as photos and music.

One new service the company is already talking about, called My Phone, wirelessly synchronizes data stored on Windows Mobile smartphones, including contacts, calendar appointments, photos and text messages, to a Website. The service is designed to make it easier for users to back up their information in case their phone is lost or stolen. My Phone will compete with a similar service from Apple called MobileMe, though it currently lacks a MobileMe feature that synchronizes data from users' cellphones to applications running on their computers. Microsoft will offer My Phone for free, while Apple charges $99 a year for MobileMe.

Microsoft's Windows Mobile is already a target for other programmers, who have generated thousands of applications for the operating system. But they aren't all stored in a single online marketplace that is as easily accessible as Apple's iPhone App Store, which has been a big hit with consumers.

Google, too, hosts an application store, dubbed the Android Market, for phones running its Android mobile operating system, the first of which is the G1 from T-Mobile USA. This week Google will start allowing developers to charge for software sold through the Android Market. (info from The Wall Street Journal)