Compaq wants to put the iPaq H3650 to work at companies across the globe. To do so, the Houston-based PC maker is beginning to aggressively bundle wireless connectivity with a wide range of business-specific products and services for the device, which uses Microsoft's Pocket PC operating system.
At the Comdex trade show this month in Las Vegas, Compaq will showcase its new approach.
But the company is fighting a somewhat uphill battle: First, Microsoft has suffered two failed attempts to deliver a robust but easy-to-use handheld operating system. Second, Palm and Handspring handhelds, which run the Palm OS, already have an enormous market share.
Ted Clark, Compaq's vice president of wireless Internet solutions, said Thursday that this time the company has what it takes to succeed in the handheld arena. If he is right, Compaq will become the first major PC maker to successfully take on Palm using a Microsoft operating system.
Recent history, to a certain degree, vindicates Compaq. The company has been building on iPaq's recent surprise success in the consumer market. It had originally forecast sales of about 7,000 units a month. But with the handhelds in short supply, it is beefing up production.
"We're ahead of plan to increase output to 50,000 a month this quarter and 100,000 early next year," Clark said. "Our goal for next year is obviously millions of units."
Compaq's new strategy is simple: Take iPaq to what Clark calls wireless business. Clark asserts that iPaq can gain Palm converts by offering something businesses really want and the rival handheld does not do well: email.
"The data you care about getting wirelessly isn't on the Internet but on your corporate network or intranet," he said. Although cellular handset makers and telecom companies have focused primarily on mobile Internet access, Compaq is betting that access to corporate assets is what most companies actually want.
Analysts agree but also wonder whether it will really sell.
"One of the debates going on in the whole handheld market is how much is too much," said Lindy Lesperance, an analyst at Technology Business Research. "Nobody wants it all in one device yet, and this is where Pocket PC has had problems."
As Compaq expands its portfolio of wireless products and services, the company will build on its server and software expertise to help corporations get their data out of Microsoft Exchange or Lotus Domino and into portable devices, Clark said.
Grabbing for market share
Compaq isn't alone in offering these kinds of services, which are widely available from IBM and other companies backing Palm OS. But in the Pocket PC arena, Compaq may have a unique product that it also can pair with other strengths. The company sells more servers than any other company and is the leading services company supporting Microsoft Exchange.
"They have a huge presence in the corporate market," Lesperance said. "If they can go in and expose the productivity gains, that these things are more than gadgets, Compaq has real potential here."
Clark demonstrated the prototype of a wireless expansion kit capable of accommodating an IEEE 802.11B card for accessing local area networks (LAN). And different PC Cards allow the iPaq to hook into other wireless technologies, such as code division multiple access CDMA and Bluetooth.
A version of the wireless expansion kit is available using a Sierra Wireless Air Card 300.
Clark acknowledges that expansion kits are a short-term solution for getting different wireless technologies to iPaq quickly. The problem: They add significant size and bulk to the handhelds.
"There's no question they will get sleeker and smaller over time," he said. "We will also shrink these down to integrated expansion packs," rather than relying on a bulky unit large enough to hold PC Cards.
Compaq plans to lean heavily on telecom companies and businesses delivering wireless content, such as Sierra and InfoWave, rather than trying to do everything itself.
Still, to make the wireless gambit work, Compaq has to be able to meet demand.
The iPaq handheld is in such short supply, the CompUSA in Rockville, Md., can't stock an adequate display model. That unit, which helps keep the store almost continuously sold out of the handheld, has a smashed screen.