Microsoft and Aether forge deal; Wireless Net service to be sold along with Pocket PC devices; Announcement today; Maryland company has similar tie with Palm Inc.; Computer


Aether Systems Inc. will announce today a deal with Microsoft Corp. to bundle and sell Aether's wireless Internet service with Pocket PC handheld devices that run on the Microsoft operating system.

The companies plan to initially offer the package only to large corporate customers who sign on for hundreds, if not thousands, of monthly subscriptions at a time for their mobile workers.

The deal means that the Owings Mills-based Aether has relationships in place with the two leading makers of operating systems for handheld computers, the other being Palm Inc.

"This is really the tip of the iceberg for wireless ISP support," said Curtis Davis, Aether's vice president for business development. "We expect widespread adoption of the Pocket PC, and really want to be on the cutting edge of supporting wireless business applications for the device

Analysts said the deal is an important move for Microsoft to build sales of Pocket PCs, which run on the Windows CE operating system, which consumers have yet to embrace.

"This provides Microsoft with an opportunity to really get into the wireless market. It's a good way for them to go," said Steve Baker, an analyst with PC Data Inc., a market research outfit in Reston, Va.

While handheld devices that connect to the Internet haven't taken hold as common tools for doing business over the Internet yet, some researchers believe they will over the next three to five years as service providers, such as Aether, make it easier to connect and access company's data networks.

Microsoft launched its Pocket PC operating system in April to compete for a slice of the burgeoning market for handheld devices which can access the Internet wirelessly and perform some functions of a computer. The Redmond, Wash.-based company would like its Windows CE operating system for handheld gadgets to become the industry standard.

But for now, Palm dominates the market with its popular Palm OS operating system, which runs its line of personal organizers, the latest of which, the Palm VII, has wireless capability. PC Data Inc. estimates that Palm holds a 70 percent market share.

Hewlett Packard and Sony make devices which run using Windows CE.

Aether already has deals in place to provide wireless Internet access service for customers using Palm devices.

With the Microsoft deal, Aether's wireless service "embraces all platforms," said Curtis Davis, vice president for business development at Aether.

Ben Waldman, vice president for Microsoft's Mobile Devices Division, said the company selected Aether to provide the bundling of the hardware, software and wireless Internet service after fielding many requests from customers who wanted a "one-stop solution."

Customers will sign up for a Web-enabled wireless device and service at the same time in much the same fashion that cell phone service providers offer phones and other gadgets at the same time a customer signs up for service.

Aether and Microsoft said they've already signed on one big customer for the bundled service, the brokerage house TD Waterhouse, which plans to issue handheld devices to its best trading customers.

The financial institution has signed on for 5,000 monthly subscriptions for its webBroker Wireless service, said Davis at Aether.

Curtis said the company is in discussions with about 30 other potential clients.

Under the agreement, said Davis, Aether will bundle and ship Compag iPaq Pocket PCs, which run on the Windows CE operating system, with a Sierra wireless AirCard 300 modem. Aether will also handle configuring the device with specific applications a customer may want installed for employees or customers accessing their Web site via the Pocket PC for e-mail, and company data.

Curtis said Aether also plans to assist customers in designing portal sites on the Web for wireless access, and would provide around-the-clock customer service support for subscribers.

Aether said it plans to charge $39.99 for monthly subscriptions. Curtis estimated that the modem-equipped iPaqs would cost just under $1,000 each.

Shares in Aether closed yesterday at $190.9375, down 6.25 cents.

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