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Sendo, Microsoft Team On GSM Smartphone

NEW YORK -U.K. start-up Sendo, owned partly by Hong Kong-based manufacturer CCT Telecom, will enter the U.S. wireless-handset market this year with a GSM smartphone based on Microsoft’s Stinger OS.

The phone is the first GSM phone unveiled to date to incorporate Microsoft’s smartphone platform. Samsung has already announced development of a CDMA phone with Stinger OS.

Sendo’s phone, a triband (1900, 1800, 900MHz) world phone, was demonstrated in public for the first time in the United States at last week’s Internet World Wireless show in New York City. It incorporates GPRS (general packet radio service) technology to send and receive data at speeds up to 128 Kbps in networks that support that speed.

Although the track record of European companies entering the U.S. market with GSM phones has been poor, Sendo contends that times have changed. The company cited recently announced plans by AT&T Wireless to expand the footprint and capacity of its TDMA network by adding GSM base stations throughout the country in its unused 1.9GHz spectrum.

AT&T’s decision expands the potential size of the U.S. GSM market, which currently accounts for only about 10 million handset sales, the company said. To justify operations in this country, Sendo’s annual GSM volume must hit 500,000 to 1 million phones, an amount that would be difficult to achieve without additional potential demand from AT&T, said senior product manager Ron Schaeffer.

European companies that entered the United States with GSM phones, only to exit shortly thereafter, include Sagem, Bosch and Siemens, which returned last year.

Birmingham, U.K.-based Sendo, founded in August 1999 by a trio of wireless executives, has already begun selling one GSM phone in Europe, to be followed by a second in March. The founders include CEO Hugh Brogan, who was a European product director for Motorola and later went to Philips Consumer Communications. There, he was responsible for the development of the Genie, the lightest and smallest GSM phone at the time of launch in the mid-1990s, the company said.

Sendo management and employees own 65 percent of the company, but CCT has invested $45 million in Sendo for a 35 percent stake. In return, Sendo will also develop wireless phones for a joint venture between CCT and Haier Group, China’s largest domestic appliance and CE manufacturer. The joint venture’s China factory will manufacture Sendo phones destined for areas outside China and Haier phones destined for the China market, CCT said.

Production capacity is 4 million handsets per year. Although Schaeffer said Sendo has no current plans to offer CDMA or TDMA phones in the United States, CCT said the China factory expects to manufacture CDMA handsets beginning this year.

The Hong Kong company is one of the world’s largest cordless phone manufacturers and expects to become No. 1 during 2001. Its cordless-phone customers include Thomson. The 21-year-old company also manufactures multimedia communications products, and telecom and IT infrastructure.

As a start-up, Sendo admits it can’t achieve the economies of scale that the three dominant handset suppliers-Nokia, Motorola and Ericsson-can achieve, but Schaeffer said Sendo compensates through design efficiencies that make it price-competitive. The two phones available in Europe incorporate only 360 components, he said, whereas the average wireless phone uses more than 500.

“Only four to five of the 10 to 15 mobile phone manufacturers worldwide can make a phone as small and featured as ours,” he added. The company’s first phone, the D800, is the lightest GSM phone in the world at 2.38 ounces, Schaeffer claimed. It’s also the industry’s second smallest at 69cc, but it doesn’t operate on U.S. frequencies.

Sendo also competes by providing carriers and consumers with a level of customization that other suppliers can’t, in part through modular designs, said Schaeffer. The D800’s user-interface software, for example, is separate from the phone’s core software, so Sendo can create a new user interface for a carrier within a day and test it in only an hour because the code won’t interfere with other phone operations.

In the S200, Sendo takes modular design to the next level. In China, it builds the core transceiver/LCD display, which it inventories in the Netherlands for European distribution. There, Sendo can clamp on different-shaped shells, provision the phones for individual carriers, then ship them out within 72 hours of a carrier’s order, he said. Consumers can also order custom shells and install them themselves.

The Stinger-based phone, called the Z100 Multimedia Smart Phone, weighs less than 3.5 ounces and features a 176 x 220-pixel color screen. Its Stinger OS was “designed from the ground up for phones,” even though it “shares a lot of code” with the PocketPC platform, Schaeffer said.

The phone incorporates PIM functions that synchronize with a desktop PIM, a WAP microbrowser and Internet Explorer, which lets users access any HTML website. The phone will reformat websites for display on the device’s small screen by reducing the size of text and graphics to fit the device’s screen.

The phone will also open Microsoft Word attachments e-mailed to the user (although the user won’t be able to edit the document). Other features include Microsoft’s Windows Media Player to play MP3 and Windows Media Audio music files in stereo through a headphone; POP3 e-mail access; a memory card slot that accepts MMC and SD cards; and an optional Bluetooth module.