Microsoft's CE to become "Windows Powered"

In an attempt to kill several birds with one stone, Microsoft is planning to revamp the branding of its scaled-down Windows CE operating system for non-desktop computers next year. Instead of stamping palm-size and handheld PCs with the "Windows CE" logo, Microsoft will begin marketing all such devices as "Windows Powered," CNET News.com has learned.

"When you buy a device, you buy a complete thing--it's not like a PC where you can upgrade the thing whenever you want to," said Phil Holden, product manager for Microsoft's Windows CE group, in explaining the change. "When we're talking to the broader consumer, it's pretty clear that customers care what the device does, but not so much what the underlying operating system is."

The move is designed to accomplish two major goals: provide a much-needed boost to existing Windows CE-based products and unify Microsoft's disparate product lines under a more cohesive vision.

At the same time, the strategy may also obscure the previous difficulties Microsoft has had selling its vision for palm-size and handheld computers.

In the two years since its introduction, Windows CE has failed to gain a significant foothold in the device market. Designed to run all manner of devices and appliances--from palm computers to TV set-top boxes to cash registers--consumers and analysts criticized the software for its one-size-fits-all mentality. Unlike rival Palm Computing's popular operating system, which is designed specifically for handhelds, Windows CE was seen by many as unwieldy and difficult to use in smaller devices.

"The fact is, Windows CE is being used in so many applications--handheld, smart cards, embedded, set-top boxes. I think Microsoft looked at that as an advantage, but consumers didn't necessarily see it that way," said Brian Phillips, an analyst with ARS. "Windows CE has been painted with such a broad stroke that it diluted the value for the palm-size PCs specifically."

Starting with the release of the next version of Windows CE for palm-size PCs, code-named Rapier, Microsoft will stop cobranding devices with the Windows CE moniker. Instead, devices such as Hewlett-Packard's Jornada 420 and Casio's Casioppeia 100 will be promoted as Windows Powered, along with every other device running on Windows CE.

Meanwhile, larger devices, such as those resembling scaled down notebooks or "clamshell" devices, will be largely relegated to so-called vertical markets. Vertical markets are typically a range of product lines that span a given category.

A wide range of appliances and devices based on Windows CE will eventually be rebranded as Windows Powered, Holden said, including larger sub-notebook devices and smart cards. The operating system will still be referred to as Windows CE in discussions with developers, manufacturers and the industry at large, he said.

"What is important here is Windows affinity--the attributes that the customer understands. There is synergy between the full PC, but it's been optimized," he said.

By de-emphasizing "CE," which never actually stood for anything anyway, and focusing on "Windows Powered," Microsoft also hopes to unify all devices and computers capable of running on its upcoming Windows 2000 server operating system and accessing Microsoft databases of corporate information.

Under Microsoft's vision, Windows CE-based devices will simply be one more thin client for server computers based on Windows 2000, its upcoming corporate operating system, due out February 17. As Windows 2000 populates the business market, the thinking goes, small devices, notebooks and computers capable of accessing databases of corporate and personal information will suddenly become much more compelling.

"So many people have wondered why they continue to hit this hammer, even though it hasn't met early projections," said David Thor, an analyst with Sherwood Research. "What's 'wagging the dog' of their world is that they've come to realize that every copy of a Windows client is Windows 2000 server enabled."

In the handheld arena, Microsoft has a long way to go catch its rival. Palm currently accounts for about three-quarters of that market, according to market research firm International Data Corporation. Meanwhile, Microsoft has suffered defections from some of its hardware partners, notably Philips, LG Electronics and Everex. Sharp and Vadem are reportedly mulling an exit from the market as well, sources say.

Recognizing some of the difficulties manufacturers have had selling larger Windows CE devices at the retail level, Microsoft and its manufacturing partners will focus almost exclusively on palm-size PCs at retail stores. Larger clamshell and "Jupiter" mini-notebooks will be marketed to corporate and vertical markets, Holden said.

"We're seeing a lot of success in the vertical space--Windows CE is becoming very relevant," Holden said. "It's just the evolution and understanding of what works at the retail space. The product that can work is a smaller handheld."

Still, changing its brand to Windows Powered may be making promises that Microsoft cannot live up to, analysts say. Windows CE is not yet fully compatible with desktop Windows, according to Ken Dulaney, an analyst with Gartner Group, who suggested Microsoft would be better off focusing on that problem, rather than causing confusion by implying that the operating systems are interchangeable."I just don't think it's going to do any good," Dulaney said.

"It makes it look like an act of desperation, and I don't think they needed to do it. What they needed to do is talk about what they're going to do with the palm-size PC. They've had the crap beat out of them in all areas. They know it, and I'm not the first guy to say it."