With Japanese electronics giant
joining the next-generation mobile joint venture called
, it would appear
chances of convincing the world's four largest mobile phone makers to drop
EPOC operating system in favor of Windows CE are slim. Yet in public at least, Microsoft is still talking tough.
On May 25, Matsushita, the fourth-largest global player in mobile handsets, said it would join
and Psion in the Symbian venture. This means that Symbian is now owned by companies estimated to have more than a 75% market share of the mobile handset market.
Matsushita's 9% stake in Symbian adds grist to the mill that Psion's EPOC operating system is much better suited than Windows CE to run small handheld devices. EPOC was originally designed to run small handheld computers made by Psion. Windows CE, it is widely held, is less efficient in terms of memory and requires more battery power to run the software.
Certainly the market seems convinced that Psion now has the market sewn up. "An estimated 75% of market share
is enough, in our opinion, to dominate the market and make alternative platforms, such as Windows CE, unlikely winners within this particular segment," according to
, which has a market perform rating on Psion and no investment banking relationship with the firm.
As such, Psion's shares have risen to a high of 965 pence this year from a low of 205 pence in June 1998, just before the Symbian venture was announced. The shares closed Monday down 0.9% at 790 pence.
Is Talking Tough Enough?
However, despite the tide of popular opinion, Microsoft still insists it can woo mobile phone manufacturers to adopt Windows CE. Greg Levin, group product manager for Windows CE at Microsoft, could hardly keep the irritation out of his voice at the perception that Windows CE is technically inferior to the Symbian operating system and is basically a stripped-down version of Windows technology.
"That's absolutely untrue garbage. There's not one single technical reason, business reason or marketing reason that the Symbian operating system should beat Windows CE," Levin said.
He confirmed a story in last week's London-based
newspaper that Microsoft is still talking to all the Symbian partners about various ventures and would continue to do so, arguing that only Microsoft is focused on all aspects of the market: PC, cable and wireless devices.
"There has not been one single device released from Symbian using Psion's system," Levin said, adding that Microsoft will announce at the end of this week it has figures to show Windows CE is outselling all other operating systems in the European handheld device market.
Indeed, as the PC encounters fierce competition from cable and wireless to become the leading gateway to the Internet, Microsoft has been liberally throwing its financial clout around to push its Windows CE onto other platforms. Deals with
and cable companies
are all designed to push Windows CE as an operating system for either cable set-top boxes or the mobile phone.
Yet all these deals are nonexclusive -- the companies are still allowed to buy operating systems other than Windows CE -- and Microsoft is really only trying to buy influence.
Pride Comes Before a Fall
So is it wishful thinking when Microsoft talks of cooperation with the Symbian mobile phone manufacturers? The partners of Symbian are certainly wary of jumping into bed with Microsoft, aware of the company's habit of trying to dominate any partnership, but the money they have invested in Symbian is negligible -- the venture is valued at about $250 million -- and could easily pull out if circumstances demanded.
And it is Psion's reputation for snatching defeat from the jaws of victory that is no doubt keeping Microsoft's hopes alive of luring one or more of the partners away.
It always seems one step back, two steps forward with Psion. The announcement that Matsushita would join Symbian came just a month after the managing director of Psion's computer division left the firm by "mutual consent" after problems at the division.
Psion is suffering badly in the handheld computer market, with sales falling 14% last year. The market leader is now
Psion's earnings are expected to fall 43.1% this year, and its stock is trading at a forward price-to-earnings ratio of 169 times, according to a poll of five brokers by U.K. financial information provider
. These facts show just how much of the firm's value is attributed to the Symbian venture.
Ultimately, though, Nainish Bapna, an analyst with
, which has a hold rating on Psion and no investment banking relationship with the firm, firmly believes Psion won't fall at the finishing line. "This time Psion's got four partners kicking its butt all the way," says Bapna.