Microsoft has new task at hand

Two years after dropping its first attempt at the handheld computer market, Microsoft tries again with a version of its Windows 95 operating system for consumer devices.

CNET News staff
3 min read
Two years after dropping its first attempt at the handheld computer market, Microsoft (MSFT) tried again today with a version of its Windows 95 operating system for consumer devices.

The operating system, dubbed Windows CE for "consumer electronics," is set to ship later this year. Microsoft is already seeding the third-party hardware and software support that it hopes will make CE a more successful effort than the WinPad project.

Software and service vendors who announced support for Windows CE today include:

--Wynd Communications, a two-way wireless communications software and service provider.
--RadioMail, a wireless Internet service provider.
--Skytel, a paging and Internet messaging service.

--River Run Software Group, provider of email and database access products for data integration from Windows 95 to Windows CE

--Communication Intelligence, developer of pen-based software

Microsoft dumped WinPad two years ago because its intensive memory requirements would have driven the cost of hardware too high. But since then, the popularity of the Internet has expanded the market possibilities for small wireless devices, not to mention the famed $500 Internet box idea made popular by Microsoft rival Oracle.

These kinds of devices, ranging from a "smart" wireless telephone to personal organizers with communications capabilities, are on the way from at least eight major computer and consumer electronics companies, including Hewlett-Packard, Casio Computer, and Philips Electronics, industry analysts said.

The handheld market now ships about 1 million devices worldwide per year, but market research firm Dataquest estimates that this number will rise to 5 million units a year by the end of the decade.

Industry analysts have predicted the emergence of the handheld market in the past and been wrong. But Microsoft's newest effort is riding a renewed wave of enthusiasm about the devices inspired by the new kinds of communication applications that run across the Net.

"The efficiencies will be in small snippets of data specifically filtered for you, like email, or even better, a list of all your email with the headers," said Alan Rider, editor of the newsletter Wireless Internet & Mobile Computing.

Windows CE will initially run on two different architectures, one that will use chips from either NEC and Philips, another that will use a chip from Hitachi. Supporting multiple hardware architectures is intended to provide a more open marketplace in which multiple vendors can participate, in contrast to previous handheld designs, such as Apple Computer's Newton, which used proprietary technology usually available from a single vendor.

Machines that use the 64-bit VR4101 processor from NEC will be the most expensive but most powerful of the three, according to Nathan Brookwood, principal analyst at Dataquest.

Although the support of two architectures is at least partly intended to provide a bigger market for application developers--who can now write for two platforms instead of one--Brookwood isn't sure that this part of the plan will work.

"It's not clear to me that the handheld market will develop to the point where applications will be loaded after you buy the device," Brookwood said. "Where it stands for the most part is that software is determined by the manufacturer."

Windows CE will come bundled with stripped-down versions of Microsoft applications like Word and Excel but not the most critical handheld software like calendar and contact management applicaitons.

Nonetheless, Microsoft's ability to provide better integration of desktop data to its own handheld operating system should give devices that run Windows CE an edge. Specifically, the company's move into handheld systems could pose a threat to U.S. Robotics and Britain's Psion Software, two of the most successful marketers of proprietary handheld products.

But with PCs fully loaded with communications accessories now available for $1,000, pricing for handheld devices will continue to be a challenge, said analyst Rob Enderle of Giga Information Group. He added that the "sweet spot" for small devices is about $300.