Kate Bulkley, Media Analyst.

Microsoft takes stake in mobile handset producer

By Kate Bulkley

The Independent

23 July 2001

Microsoft is investing more than $10m (7m) in the Birmingham-based mobile handset manufacturer Sendo Holdings.

The investment, expected to be announced today, will increase Microsoft's foothold in the developing wireless data market and mark the US software giant's first equity stake in a mobile handset manufacturer. Microsoft's shareholding in Sendo will be under 10 per cent.

Microsoft believes that allying itself with a handset manufacturer will help it to build closer relationships with mobile phone operators such as Vodafone and Orange, which are leading the transition of mobile handsets from voice-only devices to multimedia terminals.

Hugh Brogan, chief executive of Sendo, said that Microsoft has also purchased options to increase its stake. Sendo's other big shareholders include the Hong Kong-based cordless phone maker CCT and the California investment fund Bowman Capital.

Sendo, which only began shipping its first handsets in January, will use the new money to develop its unique brand of customisable phones where, for example, the handset's cover can include the mobile operator's brand and special function keys. As competition among mobile operators increases, Sendo believes the more customised features an operator can offer, both in how the phone looks and what it can do, the easier it will be to attract and keep subscribers.

Sendo already uses new Microsoft software called Stinger to drive the user interfaces and applications in its next-generation, "smart" phones which can download software, games and even video from the internet. "We think Microsoft has got the right [software] solution," said Mr Brogan.

Sendo's upcoming Z100 smart phones, which use Stinger, should be ready to ship by this autumn despite the fact that some other handset makers have recently recalled smart phones in Japan because they were overheating.

Sendo had a slow start to its sales, but now ships to 10 countries and has supply deals with Vodafone Telcel in Portugal, BT Telfort in the Netherlands and Virgin Mobile in the UK.

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