The mobile internet race

Wireless web access - through smartphones and digital communicators

By BBC News Online's Tim Weber

The mobile internet, is it the next big thing?

After all, the internet and mobile phones are the fastest growing sectors in the world economy.

Combine them and you could make profits beyond the wildest dreams of Microsoft boss Bill Gates - and he is the world's richest man.

The mobile revolution

The number of mobile phones has already overtaken that of personal computers. In a couple of years more than one billion mobile phones will be happily bleeping in their owners' bags and pockets.

Bill Gates wants to gain a foothold in the mobile internet industry

The market for mobile phones is growing by 50% a year, and soon it will be about three times as large as that for computers.

Experts predict that by 2003 there will be more consumers surfing the web on mobile phones than on computers.

E-commerce would be tagged on to this mobile web revolution.

Durlacher, a brokerage firm, predicts that the market for mobile e-commerce will be worth $23bn by 2003 - up from a mere $300m in 1998.

The rivals

That leaves the trillion dollar question: Who will be making the money?

There are several obvious candidates, among them big mobile phone companies like Nokia of Finland, US-based Motorola, and the world's number three, Ericsson of Sweden.

Manufacturers of lap-tops, personal digital assistants and hand-held computers hope to join the race as well. 3Com, maker of the famous Palm organisers, will have a go, as will the UK's Psion.

And where is Microsoft?

Where does that leave the company which dominates the world of personal computers, Seattle-based software giant Microsoft?

Microsoft president Steve Ballmer hopes to improve Windows CE

Its wealth and market position are a result of the fact that its Windows operating system has become a world standard.

But as mobile phones get smarter and personal digital organisers get smaller (and start talking), this dominance is under threat.

"Microsoft cannot impose its standards on the mobile phone industry, because the mobile phone industry is not interested in its operating system", says Keith Woolcock, analyst at investment bank Nomura in London.

Microsoft's spurned operating system is called Windows CE. Both customers and industry have been decidedly underwhelmed by its abilities and reliability.

Unfazed, Microsoft president Steve Ballmer says he has "ambitious plans" for Windows CE, first among them making it more user-friendly.

Meet David

The main challenger of Microsoft, the Goliath, is called Epoc.

Epoc is an operating system built for machines on the go, and can

• handle the all-important Wireless Application Protocol, the language that allows the wireless delivery of data;
• supports Bluetooth, the new standard for wireless communication between computers and peripherals.
• can use Java, the all-platform programming language developed by Sun Microsystems,
• and is "browser and server agnostic", happy to co-operate with any on the market.

The software was developed by a British firm, Psion, for its range of small organisers.

Psion's 5 series is running on the Epoc operating system

However, Psion and Epoc had been facing the same fate as Betamax - superior technology that just fails to conquer the market.

To prevent this, Psion farmed out its software division in June 1998 and made it the core of Symbian, a joint venture with mobile phone manufacturers Ericsson, Nokia, Panasonic and Motorola.

Link-up with Palm Computing

Epoc is Symbian's main product, a software specifically designed for wireless information devices such as personal organisers and smartphones.

But the company had a listless start, and some observers expected the venture to fall apart.

Palm computing - soon running on Epoc software

However in October this year Epoc received a vital boost, when Psion struck a technology sharing deal with its successful American rival Palm Computing.

This will essentially see new products that look like 3Com's Palm computers, but use the quicker Epoc operating system.

Epoc and Windows CE are not the only operating systems for wireless handhelds. Geoworks, for example, was one of the first companies to produce software for wireless e-commerce and information services.

Nokia's famous 9110 communicator and Hewlett Packard's OmniGo both run on Geoworks' Geos operating system.

Phone.com, NetBSD and Linux are other potential competitors.

Microsoft, the also-ran?

Microsoft now finds itself in a similar situation as in the mid 1990s, when the company's managers suddenly discovered that they had misjudged the potential of the internet.

Microsoft's deal with Ericxson gives the software giant a platform for its microbrowser

It took an enormous development effort, and - according to the US government - an abuse of its market position, to put Microsoft in the forefront of the internet revolution.

Microsoft is now trying to catch up. Its first major step is the alliance with Ericsson.

Microsoft is not pushing its partner to adopt Windows CE. But getting its microbrowser on a popular platform is a vital move to get a share of the action.

Web lifestyle

The future according to Bill Gates is called "web lifestyle". It has three pillars: computers, interactive cable services, and wireless information services.

Microsoft already dominates the world of computers.

It is on course to become a global power in the world of cable services, after making a string of acquisitions and striking alliances with companies like America's AT&T.

Conquering the mobile internet sector will be trickier. Even wealthy Microsoft will find it difficult to buy up mobile phone companies with their dizzy stock market valuations.

Finland's Nokia, for example, is now Europe's most valuable company, after pushing oil giant BP Amoco into second place.

Tiny Symbian is backed by four of the world's largest mobile phone companies. Persuading those to drop Epoc and other customised operating systems in favour of Windows CE will take a lot of effort.