By Tim Bajarin Special to ABCNEWS.com With the introduction of Pocket PC 2002, Microsoft has thrown down the gauntlet in the PDA wars and launched a new operating system that adds a whole new dimension to PDA platforms. Until now, PDAs pretty much worked in a stand-alone manner. Meaning that the applications themselves resided on the device and except for simple Internet connectivity, the PDA was an individual tool. But Microsoft’s new product adds terminal emulation, virtual private network access, new wireless hooks and other enterprise-related features. A Pocket PC device can now tap into server-based applications in real time when connected, transforming it to a more powerful business tool. Of course, on hand held devices like a PDA, the screens are small and applications may seem marginalized, but these features clearly add a new level of computing power. New and Improved Infrastructure Although it may now seem that the Pocket PC camp is one up on the Palm platform, the advantage may be short-lived given some of the company’s new moves to counter Microsoft’s new operating system. Palm’s first major advance will come in the form of a new Intel processor known as the StrongARM, by mid 2002. But, perhaps the most important new move Palm has made, is the recent purchase of the BE operating system. This system is incredibly powerful, delivering new multimedia and multi-tasking features, and is capable of managing graphic images, high quality music and video, that will allow Palm to do many new things within a hand held environment. This operating system came to the desktop market too late to have an impact on traditional PCs, but when applied to other devices like a PDA it is a major contender. More importantly, it gives Palm a new architecture to build on and gives it the option of moving the operating system into other device categories in the future. Two Steps Forward, One Step Back Palm does have a significant challenge in making this new OS backward compatible with existing applications, but all who now about the BE system see this move as a powerful and competitive one. Palm plans to spin the new OS venture early next year, placing it in the hands of David Nagel, formerly the chief scientist running AT&T’s technology labs. Nagel will have to deal with the compatibility issue, one he has been through before when Apple moved Mac’s OS from one processor core to the next. He was also critical in helping Apple develop its next generation OS in the mid 1990s. Nagel is a brilliant software engineer and proven manager and will be a major asset to Palm in helping it mainstream the new operating system for its devices in the future. Hidden Appeal Palm is also, in what I believe to be, the enviable position of being able to go after the enterprise market while at the same time, along with their partners, creating PDAs that appeal to all types of users. Already Palm devices have broken the $99 price level and many of its more powerful models sell for under $200. This is consumer-pricing territory. Palm also has one powerful partner that could be a secret weapon in the war for PDA dominance: Sony. Although Palm will clearly continue going after the consumer market, Sony has designs on mainstream consumers as well. I am convinced that it intends to make the Palm-based Clie the next Walkman platform. As you know, the Walkman made taped music highly portable and the Clie gives Sony an opportunity to make music, video and imaging its mobile digital platform of the future. And don’t forget about Handspring , whose Chairman is the father of the original Palm Pilot, Jeff Hawkins. I’m sure Hawkins has some tricks up his sleeve that I expect him to roll out at Fall Comdex (news – web sites). So, while Microsoft’s Pocket PC is clearly gaining ground, the Palm camp is not sitting idle. This PDA war is clearly a two horse race and, at least at this time, Palm is still in the lead.