Microsoft (Nasdaq: MSFT) 
demonstrated this week a new handheld device running its Windows CE mobile 
operating system that could in the future serve as a basic PC for users in developing nations.
The software giant did not say whether it would actually bring the prototype product, dubbed FonePlus, to market, but Microsoft is no doubt making moves to ensure it has a stake in the large, new wave of computer users in the world's emerging markets.
Redmond is also being prompted to action because of other efforts to give users in developing countries computing resources -- particularly the One Laptop Per Child effort lead by Nicholas Negroponte, and a coalition of mobile carriers including NTT DoCoMo, Motorola (NYSE: MOT) , Panasonic , Vodafone (NYSE: VOD) , and others. Both of these initiatives use the free and open source Linux operating system for their solutions.
"You can see why Microsoft sees it as a terrible thing," IDC Director of Mobility Research Shiv Bakhshi told TechNewsWorld. "Microsoft is extending its reach into what is going to be the most popular Internet platform in the coming days and months."
Prototype PC
The FonePlus device reportedly grew out of a World Economic Forum meeting earlier this year. Rather than provide a more mobile computing experience, Microsoft's offering connects to a television, keyboard and phone line to deliver simple PC and Internet functionality, such as creating documents, Web browsing, e-mail, and some media playback, Microsoft said.
The company does not have plans for mass production of the devices, but is investigating the possibility of bringing FonePlus to market.
Microsoft's prototype comes as other efforts, such as the $100 laptop , are under way to address the need for computing resources for people in emerging markets.
"What you're seeing here is an experiment, but a prudent one," Yankee Group Senior Analyst John Jackson told TechNewsWorld.
Favored Form Factor
While the US$100 OLPC laptop may have an advantage avoiding licensing and other costs with Linux, the preferred form factor for emerging markets is the mobile phone, according to Bakhshi, who referred to power use and familiarity as the big factors.
"I think the phone is a better thing in that respect," he said. "I think innovation is going to be limited to the phone in emerging markets."
Bakhshi added the mobile phone as a platform already has two billion users worldwide and millions of developers, giving the handheld form factor a larger "ecology."
Cell Phones First
Still, Bakhshi said the preferred form factor is also dependent on network support for computing in emerging markets, and momentum for WiMax -- a broader wireless technology being pushed by Intel (Nasdaq: INTC) , Samsung , Motorola and others for emerging markets -- may change the equation.
Yankee Group's Jackson said no device will be able to precede the network, and while there is strong support for WiMax networks in developing nations, there is also significant focus on mobile phone networks.
"Cell phones are going to get there first," he said, adding, however, that it will take time and testing for the industry to find out what works best. "It's not clear the cell phone is going to deliver Internet access to the next two billion users," Jackson said.
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