Batch of Wireless Deals Reflects Growing Competition

Updated from 10:32 a.m. EST

A slew of companies from BellSouth (BLS) to Microsoft (MSFT) announced partnership deals with wireless technology companies Monday, underscoring the stepped-up efforts to increase the capabilities of wireless devices.

"Mobile data is finally happening," said Seamus McAteer, director of Web technology strategies at Jupiter Communications. "There have been false starts since 1991. Now the necessary infrastructure is in place to free up developers from worrying about interfaces."

Software giant Microsoft intends to form an alliance with Qualcomm (QCOM), a leading developer of CDMA, or code division multiple access, wireless technology to develop hardware for wireless smart phones and pocket personal computers. Using the wireless technology, these hand-held devices will be able to incorporate multimedia and Internet services, Qualcomm said.

In a related move, Microsoft was also reportedly in a deal with AirTouch Cellular and Nextel Communications (NXTL) to allow their customers to access Internet information using Microsoft's online service. Bill Gates, Microsoft's chairman, is expected to announce the new service, which will be known as MSN Mobile 2.0, later on Monday at the Cellular Telephone Industry Association show in New Orleans.

Meanwhile, America Online (AOL) announced that it planned to develop a version of its instant messaging software for use in Nokia (NOK) mobile phones.

BellSouth said it would incorporate Sun Microsystems (SUNW) Java technology in order to increase the functions of its two-way pagers and other wireless devices.

And Amazon.com (AMZN) said it had created a new Web portal that would facilitate shopping over the Internet from a hand-held device. The portal, www.amazon.com/phone/, is designed to fit smaller cellular-phone screens and to work along the slower Internet connections typical of the hand-held devices.

McAteer of Jupiter said the recent spate of deals highlights the growing competition among Internet service providers to stake out territory in the wireless sector. But he added that Internet providers will have to be more creative if they hope to corner the wireless market, which presents vastly different challenges than providing Web service over desk-top computers.

"These companies can't be a one-size-fits-all aggregator of content because different services will appeal to different consumers," McAteer said. He noted that the smaller hand-held devices lend themselves to providing short snippets of text-based information while the Web offers the opportunity for more extensive research.

McAteer said market watchers should keep their eyes on deals between the service providers and the third-party applications developers, which will be behind the novel approaches for wireless Internet services that will likely set one company apart from another in the ever-growing market.

Last week, Oracle (ORCL)(ORCL), the world's second-largest software company, announced the establishment of OracleMobile.com, which will enable e-commerce companies to give users access to their sites by cell phone. Sprint PCS (PCS) already offers a version of Yahoo! (YHOO) on its phones.

McAteer forecasts that within five years 80 million cellular phones, or upward of 80% of the cellular market, will include micro-browsers capable of providing data services and that about 50% of cellular phone subscribers will use the service at least occasionally.