Redmond's New R&D

Microsoft's research-and-development deals of the future could look more like the one the company struck last week with France Telecom than its traditional partnerships with computer companies, according to CEO Steve Ballmer.

Microsoft and France Telecom, Europe's No. 2 telecommunications company after Deutsche Telekom, unveiled a partnership to bring out products that combine personal portable computing with mobile-phone technology. The first products they plan to bring to market include LivePhone, a cell phone and PDA combo that includes Wi-Fi Internet access; and Homezone, a device that can switch between cellular GSM reception and voice over IP and includes Wi-Fi reception. They're due in a year to 18 months.

As mobile phones and pocket-sized devices become more common ways for people to interact with computing power, Microsoft wants to augment its position in the PC market with new kinds of deals. At a news conference in Paris last week, Ballmer said Microsoft and France Telecom would share intellectual property and development costs.