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Compaq has smallest Windows CE handheld

The PC maker will unveil the Aero 1530 in an attempt to draw business from rival Palm Computing's ultra-sleek Palm V.

Compaq Computer is hoping that it has finally found a cure for a bad case of Palm envy.

Compaq on Monday will unveil the Aero 1530 in an attempt to draw business from rival Palm Computing's ultra-sleek Palm V. It is the smallest handheld device running on Windows CE software, the lighter sibling to Microsoft's desktop PC operating systems.

But any time that Compaq gets in the limelight will be limited. Palm plans to launch the successor to the Palm V, the Vx, on October 4. And newcomer Handspring is poised to shake up the industry when it starts shipping its first products this year.

Sales of Windows CE devices have trailed far behind Palm handhelds, which claimed the top four retail sales spots in July, according to research from PC Data.

The Aero 1530 is similar to the Palm V in size, but weighs 5 ounces--1 ounce heavier than its Palm rival. Both handhelds fit comfortably in a shirt pocket.

Relative bulk has been an obstacle for Windows CE handhelds, which are typically larger than their Palm counterparts, analysts and retailers say. The Compaq Aero 2130, a Windows CE handheld with color screen, is about twice as thick and as heavy as the Palm V.

A sales representative at a CompUSA outside Washington said today that many customers got with the Palm V because of its size. Yet Compaq is betting that customers who are looking for a product that is just as easy to carry but can support more technologies will purchase the Windows CE-based Aero 1530.

"We had the product on our road map for sometime but decided to wait until there was demand from our customer base," said Benjamin Williams, Compaq's North America director of displays and peripherals product marketing. "We don't see anyone coming out with a smaller WinCE unit, and that baffles us."

The Aero comes with 16MB of memory vs. the Palm V's 2MB, a 14-hour replaceable battery, and software that supports MP3 digital audio. The $299 handheld also has a Type I PC Card slot, another feature the Palm V lacks.

Handspring's upcoming Visor handheld comes with an expansion slot called the Springboard. The slot allows the addition of MP3 players, modems, pagers, digital cameras, and other features to the handheld device.

Making Windows CE work
Despite improvements to the new Aero, Compaq may still have a hard time winning customers because of Windows CE.

"3Com's perspective has always been: Do people need all the functionality of Windows CE if the applications geared toward the pared-down operating system gives them all they need?" said Mark Bates, analyst with PC Data. "If they're right, then what's the advantage of a Windows CE device?"

Palm V topped the retail handheld market in July, selling for an average sales price of $415, according the PC Data. The Palm III with 2MB of memory followed at $211, just ahead of the Palm with 4MB of memory at $348. The older Palm Pro, at $105, and the $98 Casio PV-200, rounded out the top five handheld devices.

Windows CE sales are slow overall, according to PC Data. For the year so far, sales of the Palm III led those of Palm V, which hasn't been on the market as long. Not one Windows CE device, however, found its way into the top five of the PC Data best-seller list.

Williams isn't dismayed by the slow start of Windows CE. "We see this as an emerging category for Compaq, just as the PC was an emerging category in the early '80s," he said. "We think it will be in 2000 when WinCE devices will take off and Palm begins to face some trouble."

But analysts are skeptical about Windows CE's chances of breaking Palm's lock on the market. Last year, Palm OS appeared on 41 percent of handhelds, while Windows CE claimed 25 percent, according to International Data Corporation.

"With Palm going public and Handspring coming in, it's going to be hard for some of WinCE players to gain share in the market," said Lindy Lesperance, an analyst with Technology Business Research.

But Compaq is committed to Windows CE and will introduce a new color handheld, the Aero 2180, on Monday. The Aero 2180, available for $449, offers up 24MB of memory and a new suite of utilities from Compaq.

In conjunction with the launch, Compaq is retiring the Aero 2110 and reducing its price to $369 from $399. The Aero 2130, the retail version of the 2150, will drop to $424 from $499. Compaq will also sweeten the deal with an additional $75 rebate. The 2150, aimed at corporate users, will drop to $399 from $499.

The Aero will initially be available with a silver carrying case, but Compaq is planning to soon offer other colors as part of commercial or retail promotions. Handspring is selling some handheld models in five different colors, following the successful path set by Apple Computer when it introduced the colorful iMac desktop.