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Motorola puts itself in MS hands

Disappointed with consumer demand for its handheld computers, Motorola is discontinuing its two devices to concentrates on wireless technology, including upcoming portables that run Microsoft's new CE operating system.

Disappointed with consumer demand for its handheld computers, Motorola (MOT) is discontinuing its two handheld devices to concentrate on wireless technology, including upcoming portables that run Microsoft's new CE operating system.

Leaning on its wireless expertise, Motorola launched its two handhelds, Envoy and Marco, with built-in wireless messaging less than two years ago. But a crowded, varied field of consumer electronics ranging from cell phones and pagers to low-end PDAs and laptops with wireless modems are chipping away at the consumer handheld market and satisfying the need for quick messaging and information organizers alike.

Instead of competing with products, including its own well-established cell phones and pagers, Motorola is dropping the pen-based PDA pair, which have integrated wireless capabilities that make them bulky and expensive. The company instead will assist Microsoft in its invasion of mobile vertical markets, where physicians, utility field workers, and express delivery services all use handheld devices to collect, store, and transmit data on the run.

Tomorrow, the two companies will announce that Windows CE is being ported to the Motorola MPC 821 and 823 PowerPC processors.

Windows CE is a stripped-down version of Windows 95 which will initially run on "handheld PCs" from Casio, Hewlett-Packard, Philips, and four other manufacturers. The operating system is specifically aimed at corporate users of Windows 95 who want handhelds and desktops to share data. Motorola, which will provide wireless modems for several of the handheld devices, is banking on Microsoft's desktop dominance and deep pockets to jump-start the handheld market.

"It makes sense for Motorola," said Diana Hwang, industry analyst for International Data Corporation. "Now they can concentrate on wireless, where their strengths are."

Hwang estimated combined total sales of Envoy and Marco at less than 50,000 since their releases in early 1995. Such small numbers mean that Motorola's withdrawal won't leave much of a vacuum to fill for its main competitors: the Newton Message Pad from Apple Computer and the Sony Magic Link.

Marco and Envoy are, for the most part, no longer available, although the company will continue to support and service existing units. Their disappearance won't necessarily be the end of Motorola's box-building efforts, however.

"If eventually customers want devices with integrated wireless communications, that would certainly be something we'd consider," said Randy Battat, general manager of the wireless data division.