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First Palm PCs due next month

The first palmtop handheld computers based on Microsoft's Windows CE 2.0 operating system will hit stores on April 20.

The first palmtop handheld computers based on Microsoft's Windows CE 2.0 operating system will hit stores on April 20, highlighting the fact that the market-leading PalmPilot must now defend its position against a bevy of vendors as well as the software giant.

Everex will ship its Everex Freestyle

Freestyle Palm PC
Everex Freestyle Palm PC
to CompUSA, Best Buy, and Computer City on April 20, making it the first vendor to ship a Palm PC, according to Ali Essa, project manager for Freestyle. Casio is also expected to ship its version of the Palm PC in late April.

The next wave of Microsoft-based handhelds won't hit until June, when Philips Electronics and Uniden introduce their versions. LG Electronics, Samsung, and Palmax are expected to release their Palm PCs in July, according to Microsoft.

Palm PCs will compete with 3Com's popular PalmPilot, which has sold more than 1.6 million units to date. Although Palm PCs are unlikely to capture significant market share anytime soon, the combination of the number of Palm PC vendors and the innate strength of the Microsoft name will undoubtedly make a dent in PalmPilot's market share by the end of 1998, analysts say.

"The PalmPilot is finding an effective market for a device that size. Microsoft is packing more features in there, so I think they probably [will ] do pretty well," said Phil Redman, program manager for wireless mobile communications at theYankee Group. "Users will like the fact that it's similar to Windows, [but] there will be some that want the simplicity of the Palm device."

Although PalmPilots will retain the lion's share of the market in 1998, Palm PCs will begin to make a dent in the market in late 1998 and early 1999, said Nathan Nuttal, an analyst with market research firm Sherwood Research.

"The PalmPilots will take 85 percent of all units sold in 1998," Nuttal observed. "The Palm PC prices are notably higher than the Pilot, and they have some branding problems. Consumers are going to be reluctant to run out and buy an Everex anything at this point.

"But by 1999 you're going to see Windows CE take a bite out of the Pilot," he continued. "By then, there will be marketing and branding efforts, and some of the problems associated with [the vendor] brands will have dissipated."

To defend its share, 3Com made a preemptive attack against the Palm PC earlier this month when it filed a trademark infringement suit against Microsoft in Europe, asserting that the Palm PC name is too similar to PalmPilot and will confuse potential customers.

Unlike the PalmPilot, the Palm PC is a "companion" to the PC, not a replacement, Essa said. Palm PCs will feature a "lighter version" of Windows CE 2.0 for handheld computers, lacking the Pocket Word and Pocket Excel applications found on other CE devices. Essa said that the Palm PC will feature a note-taking application instead.

Although some consumers may not discern any difference between a "companion PC" and a PIM (personal information manager), Nuttal believes that offering products with different features is a smart strategy.

"The handheld world has gotten away from the shotgun blast mentality of trying to hit multiple targets with one product," Nuttal said. "Now it's more like a rifle mentality, picking off targeted consumers with products designed specifically for that group."

The Everex Freestyle will ship in three versions. The high-end Everex Executive model comes with 8MB of memory, a cradle, and a built-in 33.6-kbps fax modem for $499. The mid-range Manager features 8MB of memory and the cradle for $399. The lower-end Freestyle Associate will carry an estimated retail price of $329.

The Everex Freestyle Palm PCs will feature an internal tape recorder for dictation, giving it the ability to digitize the audio recordings for uploading onto a PC. They will also feature a slot on the top of the machine for pager cards, LAN cards, additional memory, or a bar code reader, according to Essa.

Palm PCs represent a new market for the Windows operating system and potentially a larger market than the keyboard-equipped Windows CE handheld computers that have been on the market for a few years now. These latter devices have never sold in very large volumes because they merely represent, to many users, a heavily compromised notebook PC.

Like the 3Com PalmPilot, however, the Palm PC is truly a pocket computer with no pretenses of being a stripped-down notebook.