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Motorola and Microsoft team up on `smart' cellphone

CHICAGO -- The fledgling competition to develop "smarter" cellphones for Web-hungry consumers is getting a powerful new tag-team entry: Motorola Inc. and Microsoft Corp.

The nation's largest cellphone and software manufacturers plan to unveil an alliance today under which Microsoft software will power a series of new Motorola smart phones and wireless devices.

The products, starting with the Motorola MPx200 phone that is to make its American debut in the fourth quarter and be carried by AT&T Wireless Services Inc., will be the newest entries in a category being eyed by several big software and phone makers.

Smart phones, combining the features of cellphones and handheld computers, have been introduced in only a handful of countries and remain sparse in the United States. Fewer than 10 million of the estimated 450 million handsets being sold worldwide this year are considered smart phones.

But Gartner Inc. forecasts that volume could multiply six or seven times by 2007 as companies roll out increasingly sophisticated models to try to meet consumer demand for portable digital devices.

"The race for mobile technology will start heating up now in the US, with different handset makers and platform providers all vying for the hearts and minds of consumers," said analyst Michael Gartenberg of Jupiter Research.

While Motorola hopes the new phones will help it chip away at Nokia Corp.'s big lead in the global handset market, Microsoft is still little-tested in cellphones despite its powerhouse status in desktops, the Internet, and video games. The move is part of a push to get its software into nearly anything that connects to the Internet.

"This represents a key milestone for our business, to bring together Motorola's expertise in designing and engineering handsets with our software capability," said Andy Haon, director of product and solutions management for Microsoft.

Analysts aren't quite ready to predict that the Redmond, Wash.-based giant will take over a new market, however.

"It's very significant for them, but they still have an enormous amount to prove," said Ben Wood, a telecommunications analyst for Gartner. "They have to make sure this is a success, get other manufacturers signed up, and keep improving the software."

Wood previewed one of the phones and said he saw "marked improvements" over previous products on the software platform and in design. "The main thing is it's faster," he said.

He said Microsoft-powered offerings have a long way to go to overcome the head start of Symbian Ltd., a European-based consortium that includes Nokia and Ericsson and is the top competitor for Microsoft in smart phone software.

Motorola was a founding member of the Symbian venture but recently sold its stake to Nokia and Psion PLC.

The sleek, clamshell-design Motorola MPx200 -- while laden with Web-related, multimedia, and other functions -- is first of all a cellphone, the two companies say. Users can manage their personal information and synchronize their e-mail, calendar, and contacts; browse the Web; download and listen to digital music; and view video clips.

Motorola vice president Michael Tatelman said the new phones can help the Schaumburg, Ill.-based company gain customers. "While there are millions of business users that use Motorola devices, we're encouraging them to trade up so we can expand that base," he said.

While Motorola and Microsoft declined to reveal the price, Gartenberg said it likely will be comparable to similar offerings by Nokia Corp. and Sony Ericsson -- in the $100 to $300 range, depending on how much AT&T Wireless decides to subsidize the cost.

The new phones also are expected to be available next month in Europe from Orange SA, the English-French wireless provider, and in Hong Kong from Telecom Service Network Ltd.

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