3GSM: Microsoft - Smartphone OS margins just fine

Microsoft has responded to accusations that while its Windows Mobile software for smart phones increases the revenue an operator can make off each handset, margins aren't greatly improved because support costs escalate because of frustrated end users.

The critical metric for mobile operators has long been ARPU - average revenue per user - and Orange, prominent with several cutting-edge devices, has declared smart phones such as the SPV, using the Microsoft OS, and Handspring Treo 600, based on the Palm OS, have so far weighed in with double its typical ARPU.

But last week PalmSource - provider of the Palm OS - suggested average margin per user suffers when a phone is Microsoft-based, the implication being costly calls for technical support are more common.

Pieter Knook, senior VP of Microsoft's Mobile and Embedded Devices division, said: "There is no evidence or data to back that up."

Orange last week told silicon.com that it has not calculated figures - shown to device manufacturers, OS vendors or indeed publicly - saying Microsoft-based phones mean a lower margin per user.

Despite the exit of highly-regarded mobile executive Juha Christensen recently - who left for Macromedia - Microsoft was again very positive at this week's 3GSM World Congress.

It announced Italy's TIM will ship Windows Mobile-based smart phones this summer plus two new phones from Motorola, the versatile MPx and candy bar MPx100. Last year saw the MPx200 release - also offered by Orange - though Motorola continues to use the rival Symbian OS in some instances and work on Linux-based handsets.

Microsoft has also struck deals with Openwave, to make it easier for MSN Hotmail and MSN Messenger to run on feature phones using the Openwave interface, and Fenestrae, an enterprise software company and long time partner which will help allow connectivity to Microsoft Hosted Exchange 2003 using fax, SMS, MMS and WAP browsing.

Microsoft now has over 37 licensees for its smart phone operating system and defended the visibility of commercial implementations. Jonas Hasselberg, Smartphone product manager in Microsoft's Mobile Devices division, said the company is focused on key partners such as HTC, Motorola and Samsung and that there will be shipments in vertical industries from licensees such as Symbol that won't have a high profile.

"There is no point in us just having a huge number of licensees," he added. "It's important to us that they are successful."