22 July 2003 Microsoft is making little headway in the market for smartphone operating systems, with the Nokia-backed Symbian consortium virtually monopolising the sector, new research has found.

Only 6% of the 1.1 million smartphones shipped in Europe, the Middle East and Africa in the second quarter ran Microsoft’s SmartPhone OS, according to UK researcher Canalys. The rest are powered by Microsoft’s arch rival, Symbian, whose investors include smartphone makers Nokia, Ericsson, Motorola, Sony and Samsung.

The figures are the first real sign that Microsoft has a big fight on its hands to control the market for mobile applications. Microsoft hopes to leverage its OS and wireless .NET strategy in order to dominate the increasingly important mobile computing sector.

A further worry for Microsoft is the fact that the smartphone seems to be becoming the mobile computing device of choice, albeit among ordinary consumers rather than business people. Canalys’s figures show that smartphones (voice-based advanced wireless devices) are outselling personal digital assistants (PDAs, or data-centric wireless devices) almost two to one.

Microsoft has been more successful in licensing its OS to PDA manufacturers, including Hewlett-Packard (HP). Microsoft has about 53% of the market for PDA operating systems, ahead of Palm on 42%.

But Microsoft’s problems are compounded by the recent weak performance of HP. Last year, following its acquisition of Compaq, HP was ranked number-one in PDAs, with 36% of the market. But its share fell to 25% in the second quarter of 2003, behind Palm’s 34%.

Canalys director and senior analyst Chris Jones expects HP to have a better third quarter, however. “HP has been focused on clearing the channel to make way for a raft of new models, the effect of which will kick in over the coming months,” he says. “Palm has done well though. It has a better range of products now than at any time in its history and is hitting customers on many different levels.”