Pocket PC 2002 debuts

SAN FRANCISCO--Microsoft Chief Executive Steve Ballmer hosted a coming-out party here Thursday for a new version of the Pocket PC operating system, joined by handheld makers and, yes, developers, developers, developers.

The major device makers that supported Pocket PC the first time around--Compaq Computer, Hewlett-Packard and Casio--were there. Also on hand were a number of new supporters, including Toshiba, NEC and Acer.

Ballmer said Microsoft had made the right bet all along by focusing on devices that can do more than just act as an organizer.

"The thing I put in my pocket has got to do more for me," Ballmer said, referring to features such as digital-audio playback and security for wireless access to corporate data.

He also traced Microsoft's long history of trying to develop the right handheld. Early on, Ballmer said, Microsoft got the internal plumbing right, but that was about it.

"They frankly fell way, way, way, way, way short in terms of customer experience," he told the audience at the Concourse center. But "we didn't give up."

With Pocket PC, Ballmer said, Microsoft got it mostly right. He likened the new improvements in Pocket PC 2002 to those made when Windows went from version 3.0 to 3.1 in the 1990s.

"3.0 was a breakthrough. But 3.1 is where we buffed out the edges," Ballmer said.

Microsoft first unveiled Pocket PC 2002, which was code-named Merlin, at a Sept. 6 conference.

Several device makers used Thursday's launch to take the wraps off handhelds that run on Pocket PC 2002:

• Compaq introduced two new series for its iPaq handheld devices, the iPaq H3700 and H3800. The H3700, with 64MB of memory, is priced at $499 and will be available next week.

The H3800 series comes in several variations, all due by mid-November, with increased battery life and a standard Secure Digital slot to expand the amount of memory. The H3870, priced at $649, supports Bluetooth, a technology that lets cell phones, notebooks and other devices communicate with one another without wires. The H3850 and H3835, each priced at $599, do not support Bluetooth capabilities.

Compaq, Sun Microsystems and Insignia Solutions jointly announced that iPaq H3800 series handhelds will include Insignia's Jeode PDA edition of Java software.

"The support of Java on our iPaqs is significant because it opens the door to running enterprise applications," said John Brandewie, an iPaq product manager.

Compaq also announced an add-on module for wireless access to GSM/GPRS (Global System for Mobile Communications/General Packet Radio Service) networks. The module enables access to e-mail and a high-speed, always-on Internet connection. Worldwide shipments are set to begin in December.

Getting inside the new Pocket PC Ed Suwanjindar, product manager, Microsoft Mobility Group Sept. 6, 2001

• Casio launched its $599 Cassiopeia E-200 handheld with 64MB of memory and two expansion slots for flash memory cards: one for Type II CompactFlash and another for Secure Digital.

• Toshiba unveiled its first handheld for the U.S. market. The Pocket PC e570 is priced at $569 and will be available later in November. As the price tag indicates, it is aimed at the corporate market. Several months ago, Toshiba introduced a similar device but only for the Japanese market.

The device set for the United States comes 64MB of memory (expandable to 128MB), the company said. The Toshiba PocketPC e570 will also include Type II CompactFlash and Secure Digital slots. The expansion slots allow for add-on features such as a global positioning system, a bar-code reader for inventory management and a 56K modem.

• NEC announced its plans to release by year's end a handheld using Pocket PC 2002. Without releasing any product details, NEC said the handheld is designed for the corporate market and will have expansion capabilities.

• O2, British Telecom's wireless division, will market a Pocket PC-based device with a built-in GSM/GPRS radio, allowing both voice calls and wireless data access.

Gartner analysts Ken Dulaney and Todd Kort say Microsoft's launch of its new Pocket PC 2002 for personal digital assistants puts its main competitor in this market in a difficult position. see commentary

A demo of a conference call using a prototype of the O2 phone went off without a hitch. However, a separate demo designed to show off another Pocket PC-based device communicating with a cell phone via Bluetooth stalled. "We're still working out the kinks on that," Ben Waldman, who heads Microsoft's Pocket PC development efforts, told the audience.

Also on display Thursday were two Jornadas that HP unveiled last month.

On Wednesday, a Samsung executive told Reuters that the company will launch a Pocket PC-based device next year, but the company didn't make an announcement at Thursday's event.

At Thursday's launch, the software giant also played host to software and other companion products for Pocket PC-based devices.

Backing from new software developers is critical for Microsoft, which is looking to play catch-up with Palm in that area. Among the formerly Palm-only crowd backing Microsoft this time around is Vindigo, which makes a popular electronic city guide. Supporting developers is one area for which Ballmer is now famous, thanks to the widely circulated video of him revving up a crowd of developers.

Ed Suwanjindar, product manager of the Microsoft Mobility Group, says Pocket PC 2002 should give handheld screens a "fresher look" with the ability to manipulate pictures and other images. (1:39) Play clip

However, the launch of the new OS comes two days after market researcher IDC asserted that Pocket PC has failed to steal as much market share from Palm as once predicted. Pocket PC-based devices continue to fare well in the minds of business leaders, according to a new IDC survey of corporate executives. However, IDC's newly revised outlook for the handheld market states that corporations just aren't spending as much on the handhelds this year as had been expected.

A decline in both corporate purchasing and consumer spending has led IDC to also slash its forecast for the overall handheld market. IDC says worldwide unit growth, originally projected at 50 percent over last year, will now range from 10 percent to 20 percent.

The Pocket PC 2002-based devices are coming with new hardware specifications from Microsoft. The new OS, for example, will only support chips based on ARM designs, which Compaq, HP and Symbol Technologies were already using and which Casio, NEC and Toshiba are now using. Specifically, all six manufacturers will use Intel's 206MHz StrongARM SA-1110 processor. Intel will come out with a successor to StrongARM early next year called XScale.

Handhelds running on the Palm operating system will also come with ARM chips in the first part of next year.

A simultaneous Pocket PC launch party took place in London on Thursday.

News.com's Sandeep Junnarkar contributed to this report.