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Microsoft is teaming with hardware partners to introduce at the GSM World Conference in Cannes, France, a raft of handhelds that combine functions of cell phones and personal digital assistants, running new versions of Microsoft operating systems.

The devices will first appear in Europe, but Microsoft spokesperson Ed Suwanjindar says "we have every intention to bring them to the United States by the end of this year." The convergence devices include PDAs running the Pocket PC Phone Edition OS, which adds mobile phone capabilities to Pocket PC devices; and SmartPhone devices, which are primarily mobile phones with some PDA functions.

These so-called convergence devices, combining functions of PDA and cell phone plus Internet access, are still a small portion of all handhelds sold, says Randy Giusto, an IDC wireless and mobile device analyst. But they are gaining popularity and attention, especially with the rollout of faster wireless networks that promise to make Web browsing and wireless data synching more practical.

HP, MMO2 Announce

Pocket PC Phone Edition is a revised version of Microsoft's Pocket PC 2002 OS. It will power several new PDAs, including Hewlett-Packard's Jornada 928 WDA, also announced at the GSM conference, and an upcoming device called XDA being built by HTC for marketing by the British vendor MMO2. HTC also makes the popular Compaq IPaq, but Compaq has not yet announced plans to install the new OS on its handhelds.

With the Pocket PC Phone Edition, Microsoft is entering a market that currently belongs exclusively to Palm OS-powered devices, such as the Kyocera QCP 6035 SmartPhone, the Samsung I300, and the Handspring Treo, introduced last fall.

Palm's latest entry, the i705 introduced in January , does not incorporate cell phone functions, but it provides some Internet access capabilities including automatic e-mail checking. Microsoft is also announcing an alliance with chip giant Intel to develop reference designs that other manufacturers can use to build convergence PDAs. Today's Pocket PCs run on the Intel StrongARM processor. "We fully expect to see a jumpstart of the wireless data market with these reference designs," says Microsoft's Suwanjindar.

Orange, Sendo Stung

The SmartPhone 2002 was introduced about a year ago under the code name "Stinger." It targets the cell phone market by incorporating elements of Microsoft's Pocket PC software--including e-mail, a contact manager, a media player, and an instant messaging application. It will also pit Microsoft against long-established cell phone operating systems such as Symbian's Epoc, which powers some handsets from Sanyo and Nokia.

Microsoft has teamed up with Texas Instruments to develop reference designs for the new phones, and hardware manufacturer Compal has announced plans to use the design in phones it is building for phone vendors Orange and Sendo--which are also showing handsets here.

Microsoft's two-pronged approach reflects the uncertainty over the route handheld convergence will take.

"We don't think that there's an ideal device, so we place multiple bets," Suwanjindar says. Microsoft is also hedging its bets on wireless standards. Suwanjindar says the new operating systems will work with all phone systems, including the various forms of CDMA used in the United States, as well as GSM, which is standard in Europe and is gaining popularity in the United States.

Syncing Goes Wireless

Microsoft is announcing new server software to support its handheld operating systems. Mobile Information Server 2002 will allow people to remotely sync data in their handhelds with desktop PCs on networks. The server supports both Pocket PC 2002 and SmartPhone 2002 devices. Orange has announced plans to offer a wireless service using MIS 2002.

Wireless syncing will also be a key feature of the unreleased Danger HipTop, another PDA-phone combo device, introduced in January at the Consumer Electronics Show. The consumer device runs Danger's own proprietary operating system and is scheduled for release in the United States this spring, sold by a yet-to-be-named cellular provider.

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