Wednesday, 19 February 2003 8:30 am
Yesterday's Wall Street Journal ran a story with the headline "PC Industry's Foray into Cellphones Is a Siege".  "The U.S. personal-computer industry's attempt to capture a big chunk of the cellphone market is turning into a protracted siege.  After years of trying to become leading suppliers of  cellphone technology, Microsoft Corp. and Intel Corp. and others in the computer sector still have little in the way of sales to show for their efforts", the Wall Street Journal reported.

This should not be a surprise to regular readers of this column.  In my November 14, 2002 column I wrote

"Microsoft bought WebTV in 1997 and then announced that 1998 would be the year of convergence between the PC and the TV.  But convergence did not come about.  More recently, Microsoft has attempted to spread its operating system base into cell phones with their Smartphone operating system.  But this may end up failing as well.  Almost every day brings more news that cell phone makers, who had opted for the Microsoft Smartphone operating system, are canceling their introductions and/or switching to the Symbian operating system.  At present course and speed, Microsoft will be out of the cell phone software business shortly, leaving it to specialists such as Symbian and Nokia."

"Perhaps convergence will finally succeed with cell phones and PDAs, cell phones and video games, or cell phones and digital cameras.  Perhaps not.  We will soon know.  If it does not work, I propose that we put the dream of convergence behind us.  There must be more productive endeavors for our efforts and our investor's capital."

As chronicled in the November 14 column, attempts at convergence between the telecommunications industry and the computer industry have always failed.  Microsoft's shareholders would be far better served if Microsoft would simply pay out in dividends the $200 million per year that it is pumping into the cell phone business, or invest it in the development of new applications that will wake up the demand for new PCs.