May 22, 2000

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Will Windows CE Derail Palm?

Pocket-sized wireless devices are usurping PCs for accessing the Internet. Microsoft feels pressured to own as much of that market as it can

By Stuart J. Johnston

ast month, Microsoft rolled out its latest attempt to get into your pockets--literally. Although the Windows CE operating system has been an also-ran in the market for palm-sized computing devices since it debuted almost four years ago, Microsoft hopes that, like Windows, the third time is the charm.

Windows CE 3.0 features faster performance and fewer steps to accomplish tasks, definitely a nod to Palm's personal organizers. But it's also classic Microsoft: If the competition does one thing well, give that to the customer--and then trump it. The Windows CE 3.0-based PocketPC--made by Casio, Compaq, and Hewlett-Packard, among others--provides all the features you expect from Palm, from calendaring, contact management, and to-do list tracking to E-mail and browsing. It also lets users play games and MP3 digital music files, and it provides an electronic-book reader featuring Microsoft's ClearType screen font technology. The rationale is that people who've been buying a device to do a core group of things will spend a little more--about $100 more than a similar Palm device--to get extra functionality.

When Microsoft entered this market, Palm was already a player. By cramming much of the functionality of a PC into an operating-system-powered, vest-pocket device, Microsoft figured it would become a player, too. But the units were late, expensive, and heavy; they also had a short battery life, a clunky user interface that mimicked Windows, and tiny, almost unusable keyboards. Palm's market continued to grow, while sales of CE units trickled along. Palm now controls between 70% and 85% of the market, while Microsoft has 10% to 15%.

Why should IT people care about this? Two words: broadband wireless. Most IT departments haven't yet needed to support these devices--but increasingly, the people you support are using them to do their jobs. Eventually, IT will have to extend all desktop and notebook support issues to pocket devices, including network access, security, virus protection, and application and data synchronization.

When ubiquitous broadband wireless arrives, probably later than sooner, the trend toward continuous connectivity no matter where we are or whether we have a PC is bound to accelerate. Having a device as small as a cell phone--maybe even containing a cell phone--that can access E-mail and the Internet wirelessly and with sufficient bandwidth anytime, anywhere will obviously have an impact on how we do our jobs and structure whatever is left of our leisure time. Numerous pundits have predicted that within two to five years, there will be more small-form wireless devices accessing the Internet than PCs.

With the PocketPC, Microsoft has made advances, but it still can't resist cramming in the kitchen sink along with the simplistic functions that have made Palm king. I'm not convinced this is the right approach, but only time will tell.

In the meantime, Microsoft is working to add other capabilities, such as speech recognition, that may help further differentiate its offerings from Palm's. Bill Gates recently demonstrated a prototype device, dubbed MiPad, that combines limited-domain speech recognition with context switching based on a "tap and talk" model. You switch the voice system's context by tapping icons on the tiny screen with a stylus. Say you want to make an appointment. You first tap the icon for your calendar, alerting the recognition engine that you want to make a calendar entry. That way, it will have the right lexicon in memory when you say, "Set an appointment for Thursday at 4 p.m. with Bill Gates."

Palm, of course, isn't sitting still. It recently revealed a deal with Delphi Automotive Systems to create an in-car docking station with voice-recognition functions that will let you talk to your Palm device and send and receive E-mail over your cell phone. But it will plug into your car's cigarette lighter and reside in the cup holder, so you'll have to find an alternative location for your Starbucks fix.

One thing seems clear: As these pocket devices proliferate, the lines between work and personal life that have blurred in recent years will continue to erode. More of us will be on call at all times. Maybe a few stressed-out souls will take a cue from that popular beer ad and throw our pocket devices into the ocean. In a way, it's an appealing thought.

Stuart J. Johnston has covered Microsoft for more than 12 years. He can be reached at stuartj@halcyon.com.

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