Update: Microsoft developing next mobile OS

Microsoft, which has been carving a larger slice of the mobile device OS market, is developing a new product, code-named "Crossbow," which will incorporate features such as instant messaging, a Microsoft executive confirmed Monday.

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Crossbow will have strong links with Office 2007 and Exchange 12, Microsoft's pending new office application suite and e-mail server, said Pieter Knook, senior vice president for the mobile devices and telecoms sector. Crossbow would be the successor to Windows Mobile 5.0, released in May 2005.

Crossbow will take aim at the Symbian and BlackBerry operating systems. The OS will contain a new mobile version of Office Communicator, an Office 2007 enterprise communications application, that includes instant messaging on public and private networks, Knook said.

"As the Office [2007] PC versions of those applications improve, we're tracking that on the Windows Mobile side," Knook said.

Knook said it's premature to say when Crossbow would be released, but that the company plans for an annual mobile OS release. Mobile operating systems are also complex to implement since some operators must adjust their billing systems to accommodate new services, which can mean a six- to 12-month delay after a release, Knook said.

That process is nearly complete for the push e-mail capability of Windows Mobile 5.0, Microsoft's slow assault against BlackBerry e-mail that may now start to bear fruit. The company's new push e-mail capability depended on software upgrades on the telecom operators' side, as well as new versions of Exchange Server 2003 and Windows Mobile 5.0.

Those upgrades are nearly complete, Knook said. "You're getting to the point right now where this quarter is really where the whole offer comes together," he said.

Microsoft is hoping to nudge BlackBerry aside on costs and convenience for administrators. Knook estimates an enterprise deploying mobile e-mail with 20,000 users could save US$1.5 million in software purchases alone, plus additional costs on licensing over BlackBerry, he said.

Microsoft is counting on strong connections with device manufacturers to strengthen its position with those enterprises already using Exchange but with a BlackBerry server. The new push e-mail feature would enable those companies to eliminate the BlackBerry middleware, which also consolidates their support structure, Knook said.

Microsoft is gaining ground with Windows Mobile 5.0, but Symbian is dominant, said Nick Spencer, a research analyst with Canalys.com.

Near the end of 2005, Microsoft held a 16 percent share in the worldwide mobile OS market compared to 63 percent for Symbian, 10 percent for Access Co.'s PalmSource, 7 percent for Research in Motion's BlackBerry and 4.5 percent for others, including Linux-based ones.

BlackBerry, with around 5 million customers, still is favored for push e-mail by large enterprises, Spencer said. Other companies have also allied for hosted services, such as Vodafone Group and Visto, adding more competition, he said.

Microsoft is most likely to have success with small- to medium-size businesses already using Exchange server, Spencer said. But the long run-up to push e-mail -- it was first announced in June 2005 -- wasn't helpful.

"They need to get some momentum quite quickly," Spencer said. "I think that put doubt in people's minds."

Microsoft's market reach will depending on the success of devices such as Motorola's Q, a BlackBerry-like smart phone with a full Qwerty keyboard running on Mobile 5.0, Spencer said.