marketplace CE

Palm the Winner? Not for long.

by Hal Goldstein

If Windows CE were a stock, I'd buy it today at a depressed price. Industry pundits have declared Palm Computing's Palm the winner leaving the Windows CE Palm-size PC on life support if not dead. Since Palm has between 75% and 80% of the palm size market share, the conclusion seems reasonable. Furthermore, Palm is going color; it is licensing its operating system to Sony, Handspring and others; and it is going public.

Yes, all that is true. But I would still like to take the Las Vegas odds and bet on Windows CE.

Windows CE will win. The reason is simple: Microsoft must be victorious in the handheld device space to perpetuate its overall market position. According to estimates, by 2003 as many dollars will be spent in the handheld device market as in the desktop arena.

Microsoft has all the pieces needed to win

Bill Gates recently changed Microsoft's "vision" for the first time in 25 years: "Great Software on any device, any time, any place." Windows CE is fundamental to that vision.

Microsoft has a proven methodology for overtaking a competitor with a strong market lead. Remember the Mac O.S. and Windows, WordPerfect and Word, 1-2-3 and Excel, and most recently Netscape and Explorer. In each case, early versions of Microsoft products received poor reviews and a tiny market share. At early stages Microsoft studied the market and took feedback from customers. In every case, at version 3 Microsoft marshaled its forces producing a strong product and an effective marketing campaign. Coming this Spring or Summer: Windows CE, version 3.

Microsoft has the means and know-how to triumph. Microsoft can easily outspend any competitor. As importantly, Microsoft has the marketing experience and relationships needed for advertising, public relations, Web and retail channel success.

Microsoft has partnered with Hewlett-Packard, Compaq, Casio, and Symbol against Palm. Each of these companies supply experience, means, prestige, R&D, and marketing power.

Microsoft has the expertise and relationships necessary to work with thousands of independent software vendors experienced in programming for Windows platforms. Software for Windows CE provides solutions that will sell Windows CE devices.

Enter the Windows Powered Pocket PC

"Windows Powered Pocket PC" will be the new name for Windows CE palm-size devices. From the new name we can deduce much of Microsoft's market strategy.

"Windows Powered" extends the Windows brand name to millions of Microsoft customers.

"Pocket PC" creates yet another "PDA" category ­ one with no baggage attached. The name clearly states what the device is ­ a PC that fits in your pocket. Microsoft's campaign will evangelize the benefits of having a computer in your pocket as opposed to having a simple electronic organizer.

What about the new color, expandable versions of Palm? Palm loses as it will be competing in Microsoft's "Pocket PC" arena.

Over time as Microsoft dominates the Pocket PC space, manufacturers will come down in price and functionality and compete well in Palm's "low-end" territory of doing a few things well.

The only question that remains is whether Microsoft did its homework with version 3. Will Pocket PCs be easy to use out of the box in a useable form factor? We bet that the answer is yes. We'll all learn more in the coming issues of this magazine.