3Com's PalmPilot easily continued to dominate the field in 1998, garnering almost 80 percent of the market, in the face of a full assault from Microsoft and its fleet of palm-size devices. But analysts caution that if the software giant continues to refine its Windows CE operating system, the balance will inevitably shift to Microsoft.
This year saw the launch of the third-generation PalmPilot, the Palm III, as well as the first generation of palm-size PCs from companies such as Casio, Philips, Everex, and Hewlett-Packard, among others.
"Palm has gained momentum this year," said Tim Bajarin, an industry analyst with Creative Strategies. "Windows CE has been slow to gain a foothold in the market."
The PalmPilot has been lauded for its platform's intuitive interface and ease of use. Meanwhile, Microsoft's Windows CE has been criticized for being overly reliant on the desktop model, according to Bajarin. Windows CE is essentially a pared-down version of the desktop operating system.
"Most people who use CE on a handheld device complain that it's too difficult to navigate. Microsoft, in trying to extend the Windows metaphor, put in Windows-like command structures," he said, adding that the PalmPilot interface is "extremely clean."
It is not necessarily surprising that users of palm-size PCs encounter more glitches and bugs than PalmPilot users, added analyst Jill House of International Data Corporation, considering that palm-size PCs are running on the first generation of Windows CE, while the PalmPilot is in its third iteration.
"The first generation is not doing terribly well, but with next generations, there are likely to be improvements. It will get better," House said. Indeed, IDC predicts that by the year 2002, Windows CE devices will account for 55 percent of the market, up from 15 percent this year.
Furthermore, the preponderance of makers of palm-size PCs will eventually erode Palm's dominance. "Part of it is sheer volume. There are eight vendors, and more devices out there," House said. "The other part is going to be improving on the operating system."
But don't look for PalmPilots to quietly disappear from store shelves. Palm Computing, 3Com's PalmPilot division, has already announced the impending arrival of the PalmVII, an updated version of the Palm III fitted with a wireless antenna for limited Internet access. It is due in mid-1999.
Will Razor finally make the cut?
Razor, the much-discussed but as-yet unannounced next-generation PalmPilot with enhanced display and slimmer design, is also expected in the second quarter of 1999 after several delays, according to Bajarin.
"I don't think at this point Palm is in any danger of giving any ground to Windows CE," he said.