Eclipse International laid off 11 employees, out of a total of 58, confirmed Ray Grammar, chief financial officer of the software developer. Eclipse sells system software, called AdvanCE and CorePak, which allows manufacturers to build devices based on the scaled-down Windows CE operating system for handhelds and other devices.
Because it only develops Microsoft software, the company's fortunes are inextricably tied to the success or failure of Windows CE, which has met with some resistance in both the embedded and consumer markets.
In both areas, customers have complained about the lack of hard real time capability (meaning the ability to process incoming data within strict time parameters) and problematic synchronization of information between CE devices and other machines, including desktop PCs.
"It's a matter of not fulfilling our business plan," said Grammar. "We're not seeing the sales of CE to be what we had hoped."
There have also been hurdles in the Windows CE-based handheld realm. These devices are far behind the handhelds from Palm Computing, and additions like color displays have not helped sales much, if at all.
The original idea of Windows CE was an operating system that would rapidly expand into markets such as TV set-top boxes, game consoles, and other embedded applications, said Richard Doherty, president of The Envisioneering Group consultancy. Companies that built their business around that notion don't have as big a market for their products as they thought, he said.
"That's because these businesses have not gotten the exposure from CE getting into all these new markets," said Doherty.
While there is a market of a few million mobile professionals willing to use handheld devices, the larger market for Windows CE-based cable TV set-top boxes and game machines "has not materialized," Doherty said.
Eclipse will evaluate the possibility of expanding its product line beyond its core Windows CE software, Grammar said. "We're going to re-look at the business plan. And that would mean that we would be looking at different possibilities," outside Windows CE.
Microsoft has been active in supporting the Windows CE product line, Grammar asserted, but its efforts have largely been unsuccessful, thus far. "They're looking at the whole situation--trying to bolster both CE and embedded NT," he said. "It's timing--the general business condition of the embedded market."
Eclipse's problems aren't necessarily endemic to all Windows CE developers. CasioSoft, an independent subsidiary of Casio, which makes Windows CE hardware has found that there's good money to be made in so-called vertical markets such as retail merchandising, said Brad Nemer, a software product manager for CasioSoft.
CasioSoft, which was formed in late 1998, has developed custom software for companies like Anhaeuser-Busch, the beverage maker, which helps companies keep track of information about product displays and pricing at retail locations using Windows CE-based handheld or palm-size devices.
"Most people will say Windows CE has been slow to develop in the retail market," but the vertical market has long been interested in CE devices, Nemer said. Nemer's colleague, Paul Thatcher, said CasioSoft has been selling its software to companies at the rate of about four new customers per month, who each pay out between $50,000 and $70,000 for the basic software package; the company can also act as a systems integrator and procure all the needed hardware.
It's too early to say if the market for Windows CE is or is not successful, said Nemer. "Some companies have already disappeared, but it seems like things are finally getting going" in the retail market.
Bsquare, the largest provider of Windows CE products and services, earlier this year signed a multiyear, multimillion dollar agreement to continue providing Microsoft with services such as programming tool development. Another company, Iobjects, has its software for playing back digital music shipping on several brands of Windows CE devices, but it's making most of its money from consulting and services contracts, some of which are with Microsoft for non-Windows CE products.
Spyglass is another company that has benefited from long-term contracts to provide consulting services for those who want to make Windows CE-based devices.