Compaq Computer will announce Oct. 4 that it will begin shipping two new iPaq handhelds using the new version of Microsoft’s Pocket PC software and will offer a wireless communications expansion pack, sources say. The company confirmed it would make product announcements on Oct. 4, but declined to discuss details. The Compaq announcements will be part of Microsoft events in San Francisco and London where other partners, such as Casio, Hewlett-Packard, Intermec Technologies, Symbol Technologies and Toshiba, are expected to make similar announcements. Microsoft is expected to officially launch its new Pocket PC 2002 operating system, code-named Merlin, at that time. The new OS will come with new tools, such as wireless networking and security features, to make life easier for corporate workers. Pocket PC 2002 has a look and feel similar to Windows XP (news – web sites), Microsoft’s upcoming desktop OS. Like the current version of Pocket PC, the new software is based on version 3.0 of Windows CE. Compaq’s new devices are meant to take advantage of the momentum Pocket PC software is gaining in the corporate market for handheld computers. The business market has been the center of attention for handheld manufacturers because of its potential for growth. Businesses tend to buy devices in large volumes, compared with the single units consumers purchase. While Palm’s operating system maintains a considerable lead in market share, Pocket PC has been coming on strong of late, according to analysts. Palm has been taking steps to beef up its operating system and make it more competitive with Pocket PC. The company announced that it was creating a separate operating system subsidiary and announced on Aug. 16 that it would acquire the technology assets and intellectual property of software maker Be for $11 million in stock. Compaq’s new iPaq handhelds will use Microsoft’s Pocket PC 2002 and will have the same amount of memory, 32MB of ROM and 64MB of RAM, as well as the same processor, Intel’s 206MHz StrongARM SA-110. The higher-end device, which will be part of the iPaq H3800 series, will come with a Secure Digital card slot, voice-command and voice-control software, and will support 65,536 colors on its active-matrix screen. The active-matrix display on the lower-end device, which will be part of the H3700 series, will support 4,096 colors. Both devices will also come with rechargeable lithium polymer batteries; the capacity of the battery in the H3800 series handheld will be larger than the H3700’s battery. Compaq has not announced prices for the new models, but a Microsoft representative said recently that the company expects Pocket PC 2002 devices to sell in the $400-$600 range. While the iPaqs are expected to ship Oct. 4, the wireless communications expansion pack will only be announced on Oct. 4 for shipping by the end of the year, according to sources familiar with Compaq’s plans. The expansion pack is meant to allow iPaq users to wirelessly receive voice and data through Global System for Mobile Communications, or GSM, and General Packet Radio Service, or GPRS, networks. On Aug. 22, Compaq announced that it would support Intel’s Personal Internet Client Architecture (PCA), the chip giant’s blueprint for making wirelessly enabled devices with Intel chips. Compaq also plans to build a cell phone based on “Stinger,” Microsoft’s reference design for Web surfing phones. HP has already announced its handheld devices–the Jornada 565 and 568–using Pocket PC 2002 and is expected to announce on Oct. 4 that its Jornada devices will be shipping. HP representatives said the company does not have plans to build a phone based on “Stinger.” However, HP will announce Oct. 4 that it will have Wireless Options for its new Jornada handhelds. HP has previously announced support for Intel’s PCA. HP is working to acquire Compaq, but the fate of the two handheld lines is still up in the air.