Pocket PC’s critical next step

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Pocket PC’s critical next step Today marks the second anniversary of the launch of Microsoft’s handheld computing platform, Pocket PC. But in truth it’s been at the handheld game a lot longer than that.

Microsoft’s handheld computing days stretch way back to the early 1990’s, when it began work on a couple of internal projects, codenamed Pulsar and WinPad (see Timeline below). Although it was more focused on creating an embedded operating system for set-tops boxes at the time, there was a small group of Microsoft engineers with their eye on handheld computers. The embedded OS they eventually came up with, Windows CE, is still with us, and although it’s had its share of up and downs it remains the heart of Pocket PC.

The first version of Windows CE was shipped in 1996, the same year that U.S. Robotics launched its PalmPilot organizers. But the first Windows CE devices, called Handheld PCs, were bigger, slower and more expensive than the PalmPilot. Not only that, they weren’t as easy to use. Within two years, Palm had grabbed half of the nascent PDA market, while Windows CE-based Handheld PCs had managed less than 15%.

So in 1998, Microsoft aimed its sights directly at Palm. It launched the Palm-size PC platform, foresaking the Handheld PC’s clamshell and keyboard design for a stylus and touchscreen, and added a flock of new device manufacturers in its corner, including Philips, Everex, and Uniden, in addition to its old stand-bys Hewlett-Packard, Casio and Compaq. Some industry analysts predicted the rise of Microsoft and the fall of Palm within two years in the PDA sector.

It never happened.

While Palm went on to snap up more than 75% of the market, Windows CE struggled to reach 20%. In 1999 Windows CE devices captured 17.8% of the market, but that fell to 10.3% in 2000. Worst of all, the devices were being pounded in the press and its bevy of licensees had begun to abandon ship.

But Microsoft was not done yet.

In April 2000 it launched a revamped edition of its handheld computing platform, even going so far as to change its clunky Palm-size PC name to Pocket PC. Again, many industry analysts predicted that Microsoft would catch, and likely pass, Palm in the market.

And again, it didn’t happen.

While Pocket PC has managed to boost its marketshare to somewhere between 20-25%, depending on whose numbers you choose, it still isn’t the overwhelming success that Microsoft had intended. And some say that if it weren’t for the popular Compaq iPAQ Pocket PC, the platform would be close to dead.

So what’s on the horizon for Pocket PC and Windows CE? Is there something in the works that will help it catch Palm and its major licensees, Handspring and Sony?

Pocket PC Timeline

Well, there’s no doubt that the success of the Compaq iPAQ Pocket PC has stirred other manufacturers, including Toshiba, NEC, Fujitsu-Siemens and Hitachi, to give it a shot. While this will serve to drive competition and innovation, it also could put us right back to where we were in 1999, when there were a lot of licensees fighting for a small piece of the handheld pie.

The other card that Microsoft and its manufacturing partners hope to play is the convergence card. Microsoft’s Pocket PC Phone Edition platform enables device makers to create new Pocket PCs that double as cellphones. Whether there is a market for this remains to be seen, however, it’s unlikely that consumers or businesses will want to foot two cellphone bills.

So as we mark Pocket PC’s anniversary we must wonder what is in store for the next year. Will Pocket PC catch Palm, or will it become obviated by Tablet PCs and Smartphones?

Only time will tell.

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