Silicon Insights: Microsoft’s PDA Bid

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Silicon Insights: Microsoft’s PDA Bid
By Tim Bajarin
Special to
Microsoft goes after Palm’s PDA clients. Can it win this late in the game?

Over the last couple of years, the personal digital assistant, or PDA, has gone from the newest toy of the technology crowd and has emerged as one of the hottest-selling products in the market.

Although PDA sales have cooled during the economic downturn, they are still on track to become the latest battleground. Many vendors realize that PDAs could eventually outsell PCs and someday become the one piece of technology people would carry with them everywhere.

Apple actually introduced the first commercial PC and tried to make it the industry standard, but in the end Microsoft won the standards war with its Windows operating system. A similar scenario is taking place today with Palm leading with its Palm operating system, but Microsoft is coming on fast with their Pocket PC platform.

As little as 18 months ago it appeared that Microsoft had almost no chance of encroaching on Palm’s strong industry position nor gaining serious PDA market share with the Pocket PC.

But in the last 12 months, Microsoft has not only gained ground, but is posing a real threat to Palm’s current market dominance. With the help of Compaq , Hewlett-Packard , Toshiba , Casio and a few new partners to be announced soon, some analysts believe that Microsoft could perhaps do to Palm what it did with Apple and become the platform of choice for the majority of PDA users in the future.

Late Bloomer?

How could Microsoft make such a serious run at the market this late in the PDA game? Well, first, it is taking aim at corporate users, where the firm has two key advantages over Palm.

The first plus comes from the way the Pocket PC interacts, connects and seamlessly integrates within Microsoft-based servers and applications within IT environments.

That’s mainly because the device is based on Windows CE, which includes core operating system components such as Pocket Word, Pocket Excel, Pocket Outlook and Pocket Internet Explorer which work well within the mainstream Windows operating system.

The second advantage comes through Microsoft’s partnership with Compaq and Compaq’s strong presence in corporate markets. Compaq has been able to sell its iPaq pocket PC as part of its corporate server and desktop offerings. It also leveraged Compaq’s ability to service and support the pocket PC as a part of its overall corporate program.

Also key to Microsoft’s program are new Pocket PC offerings from Hewlett-Packard and Toshiba that also take aim at corporate markets. This particular emphasis on selling PDAs to business users is a critical strategic move since this sector is starting to realize the importance of extending desktop applications into the mobile arena.

The focus on business users will serve Microsoft and its partners well and is going a long way towards helping them gain ground in their PDA platform wars with Palm.

Tools of Competition

Last week I spent two days at a special Pocket PC technology forum for analysts and although much of the information I received was under non-disclosure agreements, I can tell you that Microsoft has three other weapons in the works that should also help its cause.

The first, set to be unveiled in September, is a new and even more powerful version of the Pocket PC operating system that takes greater advantage of next-generation processors slated to be used in future PDAs.

The second is a set of programming tools that makes it even easier to create powerful applications aimed at business users.

And the third is the integration of various wireless technologies into the Pocket PC platform itself, allowing hardware vendors to be much more creative in the way they develop and integrate wireless technology into next-generation versions of their PDAs.

Yet, the downside of this strong corporate strategy may be its narrow focus. Right now, a mainstream consumer and education market is also developing. So far, only Casio has taken advantage of the growth by giving this budding group products that are much more price sensitive and comes with a more creative set of offerings.

However, with corporate markets waking up to the potential of PDAs, Microsoft is still in a great place to ride this demand towards becoming the PDA standard.

Of course, Palm and its partners also realize the potential and they are not letting Microsoft go after these users without a fight. Palm is also in a good position in terms of providing PDAs that speak to the needs of both the high end of the market as well as price-sensitive mainstream users.



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