Microsoft pulls out of mobile JV with Ericsson

After much to-and-fro, L.M. Ericsson Telephone Co. confirmed on Friday that it will take full control of its joint venture on mobile technology with Microsoft Corp., Ericsson Microsoft Mobile Venture AB.

"We have decided not to move forward with a joint company with Microsoft and change the legal framework to that of a licensing agreement," said Ericsson spokeswoman Aase Lindskog.

The Mobile Venture company will now become part of Ericsson's global systems integration business, Lindskog said.

Microsoft could not immediately comment on the dissolution of the joint venture, which was launched in Dec. 1999 with much fanfare from both Microsoft President, now Chief Executive Officer (CEO), Steve Ballmer and Ericsson President and CEO Kurt Hellström.

The partnership was initially designed to use Ericsson's WAP (Wireless Application Protocol) telephone technology and Microsoft's Internet-enabled mobile phone software platform, Microsoft Mobile Explorer (MME), to produce mobile handsets.

At the time, Ballmer touted the alliance as providing Microsoft with a firm position in the mobile market. In typically flamboyant Ballmer style, the Microsoft CEO said that he hoped all 30 million people that were then using Exchange for e-mail would use the platform for e-mail access over mobile phones when it became available.

"We have noticed that the demand from the mobile market is much bigger now than when we started this agreement and it also took us a lot longer to develop our product than we had thought," Lindskog said Friday.

In September of last year, Microsoft and Ericsson announced that they expected the first jointly-produced mobile handsets to be commercially available for mobile operators by the end of 2000, something which did not materialize.

The joint venture was to be 70 percent owned by Ericsson with Microsoft taking a 30 percent stake, but that transaction was never carried out, Lindskog said. Ericsson Microsoft Mobile Venture "has always been fully owned by Ericsson and Microsoft never purchased their 30 percent," Lindskog said.

News that the joint venture was facing dissolution first came to light on Thursday when the Swedish newspaper Dagens Industri reported that Ericsson was rethinking the relationship and had held crisis talks with Microsoft Wednesday night.

Just two days prior to that, Ericsson and Japanese consumer electronics company Sony Corp. formally announced their new mobile phone brand, Sony Ericsson Mobile Communications AB.

Ericsson quickly denied that there was any trouble between itself and Microsoft and that the partnership was "on track."

"We've had three commercial contracts and are now wrapping up a few more deals before the year-end. We're (Ericsson and Microsoft) always having meetings but there was no crisis meeting. The cooperation is running to plan," the Dow Jones Newswires quoted Lindskog as saying on Thursday.

Microsoft Corp., in Redmond, Washington, can be reached at +1-425-882-8080 or at http://www.microsoft.com. Ericsson, in Stockholm, is at +46-8-719-0000,or at http://www.ericsson.com.

ITworld.com

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