Google, Microsoft, Palm rev up smartphone race

By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Google Inc, Microsoft Corp and Palm Inc stepped up efforts to bolster their smartphone line-ups, as the tech industry's key players increasingly move to challenge Apple Inc's popular iPhone.

In a flurry of announcements on Tuesday ahead of the holiday shopping season, the companies introduced new phones, wireless carrier partnerships and efforts to boost the availability of new applications for the phones.

The moves underscore the extent to which the smartphone market has emerged as a prime battleground encompassing a variety of technology businesses and one of the few markets experiencing rapid growth in a rough economic environment.

"Everyone wants to build up and bolster their smartphone portfolio, because that's what drives more dollars for the carrier and that's where the market is going," said Avian Securities analyst Matthew Thornton.

Google, the world's largest Internet search company, said it was teaming up with Verizon Wireless to co-develop multiple phones based on its Android operating system. They plan to bring two phones to market this year, and Verizon Wireless CEO Lowell McAdam said the partnership could result in the introduction of multiple devices per year going forward.

The partnership with Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc, is a boost for Google's efforts to gain a foothold in the smartphone market.

It caps a string of Android phone announcements, including Motorola Inc's recent introduction of the Cliq phone and HTC's Hero phone, slated for U.S. release next week.

Google does not charge a licensing fee for Android but hopes to benefit by serving highly targeted mobile ads to users.

Microsoft, whose software is used in the majority of the world's PCs, unveiled on Tuesday a new version of its smartphone software, Windows Mobile 6.5, and promised more than 30 new devices with the software would be available in more than 20 countries by year's end.

According to research firm IDC, smartphones running Microsoft software accounted for 11 percent of the worldwide market in the first half of 2009, compared to 11.7 percent share for Apple's iPhone and 19.9 percent share for Research in Motion's Blackberry.

Nokia's Symbian operating system had the largest share with 46.4 percent share.

IPHONE THE ONE TO BEAT

But analysts say that Apple's iPhone, despite its modest share of the market, is the product to beat.

"It may not be reflected in the numbers, but everyone is playing catch-up" with Apple, said C.L. King analyst Lawrence Harris.

In addition to the technological innovations ushered in by the iPhone, such as its multi-touch screen, Harris said that Apple is the clear leader when it comes to the software apps created by third-party developers to work with a smartphone.