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Microsoft - is it really trying to rival Nokia?

Vodafone - a partner of Microsoft in its recently announced "web services for mobiles" white paper - has decided to buy 3G mobile phones, not from Nokia, but from Japanese suppliers, says the Daily Telegraph.

The main reason for picking a non-Nokia phone, would be that Nokia doesn't have a range of 3G phones on the market yet. However, the report stated that the deal reflected Vodafone's desire to "brand" its services as more important than the make of phone - as it did with the Vodafone Live! product, which used the unknown Sharp phone as its flagship handset.

The bit that will interest commentators and analysts, if true, is the conclusion that this represents an attempt by Microsoft to move into Nokia territory.

"As a sign of Nokia's waning market power, earlier this year Vodafone relocated its head of global purchasing, Bob Collymore, to Japan," said the Telegraph. It added "Vodafone has also forged an alliance with Microsoft (which hopes to become an important player in the nascent market for "smart" devices) to link mobile data services to personal computers."

And then, surprisingly: "The deal was seen as a boost to Microsoft's drive to topple Nokia from its pivotal position in mobile telephony."

Back in August, research firm IDC did predict a major telephony role for Microsoft, but not in mobile phone handsets.

According to the report from IDC, "a battle is looming for the enterprise desktop between major IT and telecom vendors. At the centre of this battle are new and emerging voice over IP (VOIP)-based enhanced services and applications based on the SIP standard."

The report suggests that Microsoft may emerge as a major force in telecom in several years' time, providing formidable competition for IP-PBX vendors such as Cisco, Avaya, Alcatel, Siemens, Nortel, and 3Com.

The Telegraph report, however, contains the first hint that Microsoft has ambitions in handsets - other than as a supplier of software for them.

A senior source inside a rival handset maker commented (anonymously): "Frankly, I would be very surprised indeed if Microsoft was interested in selling phones. They've often indicated to us that they'd like us to use their software - Windows Mobile 2003 - in our phones, but there has never been any sign that this would have to be on an exclusive basis, nor have they shown any interest in building handsets."

Another handset maker, which is negotiating with Microsoft over a Windows Mobile handset, suggested that the threat to Nokia, if there is one, is generic - from the whole carrier industry, which sees Nokia as controlling too much of the market.

"I'd think that Nokia would be more worried about its business selling infrastructure equipment to carriers, than about Microsoft selling handsets," said this source.