Pocket PCs for the Masses?

Last issue I declared Microsoft's Pocket PC will capture the market from Palm. In this issue I discuss what stands in the way of this victory and, more fundamentally, what must happen before Handheld and Pocket PCs become widely adopted in the general consumer marketplace.

A key Microsoft advantage against its rivals is deep pockets. As long as Palm remained a division of 3COM, securing sufficient funds for Palm marketing and R&D was a concern. However, 3Com (NASDAQ: COMS) on "Palm Thursday," March 2, successfully spun off Palm (NASDAQ: PALM) into a separate company.

The night before the IPO, the set price was $38 per share, guaranteeing the company $874 million -- 153 percent more cash than originally projected in January. Because, institutional investors were already committed to open market orders, Palm soared 281.6 percent over the offer price, opening at $145 per share. That gave the company an instant, but transient total of 3.3 billion dollars. Palm reached a high of $165. On this writing (March 24) the stock is back down to $57, 1.3 billion dollars raised. With the introduction of the Pocket PC, the inflated Palm price will likely go down further. However, even so, Palm will have lots of capital to invest in marketing and R&D which will help equal the financial playing field against Microsoft.

Our guess is that most reviewers will declare the Pocket PC the clear winner over the color Palm for users willing to spend between $400 and $500 for a PC in their pocket (see page 10). However, the interesting and probably more important battle will be on the low end where Palm has dominated.

Askey (www.askey.com) has already announced a $200 monochrome version of the Pocket PC. We can reasonably expect other companies to introduce similar models. The question is will these less costly Pocket PC's saturate the web, retail stores, and people's awareness at least as effectively as Palm. My bet is yes, based on the utility of the Pocket PC coupled with the marketing clout of Microsoft's corporate giant allies.

Most of you reading this know the value of having PC power in your pocket. The PIM functions -- contacts, appointments, tasks, notes, calculator -- in themselves make the pocket and handheld PC invaluable. Add to that e-mail and Internet functionality, Word and Excel ability, and Money, Reader, and Media Player and you have a powerful tool for the knowledgeable PC user.

What will it take for these pocket-sized devices to become more universally accepted? The obvious answer: indispensable functionality and ease of use.

As a reader of this magazine, you probably appreciate computerized tools. However, the vast majority of consumers won't share your interest in these gadgets until it becomes apparent that these devices provide a functionality that no one wants to be without (like phone or TV) and that can be used painlessly.

For people to consider the Pocket PC a necessity, it must help them access two things: their e-mail and the Internet! The ability to e-mail a relative or visit a favorite web site any time, any place, will give these devices a mass appeal. If phone and multi-media capabilities are integrated, these devices will become "must-haves."

Windows Powered devices all have e-mail and Internet capabilities. Next, modems must become standard in Pocket PCs with enough storage space to hold plenty of e-mail. The critical step will be for those modems to become wireless and for wireless access to become universally affordable and available.