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IBM pulls plug on Windows CE clamshell device

While Microsoft is pulling out all the stops for the launch next month of its struggling Pocket PC, manufacturers of some of the less popular Windows CE devices are re-evaluating their plans.

Microsoft is investing heavily in next month's launch of Pocket PC, an updated version of Windows CE for handheld devices, although another licensee has dropped out of the market and other partners are re-evaluating their plans.

IBM has quietly discontinued its Workpad Z50, a subnotebook-like device running a version of Windows CE. With the Workpad Z50 gone, IBM effectively has dropped out of the Windows CE camp, at least for now. Currently, the only Workpads that IBM sells contain the Palm operating system, and the company is trying to promote these heavily to corporate buyers.

"It quietly went away," an IBM spokesman said of the Workpad Z50. "We haven't refreshed the product."

Other manufacturers are going through similar gyrations. Both HP and Compaq plan to participate in Microsoft's Pocket PC onslaught. Later in the year, Compaq will rebrand its Aero line of handhelds, along with wireless products and other devices, to be part of its iPaq line. Nonetheless, Compaq and HP are re-evaluating Windows CE products, such as subnotebook CE devices, that don't compete directly against Palm handhelds, sources have said.

Enthusiasm for the devices, which don't look or act like Palm organizers, seems to be waning at Microsoft as well. The company officially says it will improve the software for these larger devices, but it has announced no plans for updates to the version of its Windows CE operating system for sub-notebook and clamshell devices, two types of handhelds that offer relatively large screens but haven't sold well.

Windows CE has yet to really catch on among consumers, who have complained that the operating system is glitch-prone, difficult to use and hard to synchronize with other software, including Microsoft Windows. In particular, "larger than Palm" devices like the subnotebook CEs have struggled to find a niche. Many were priced between $700 and $1,000, making the limited-function devices a hard sell in comparison to full-function laptop computers. When prices have been cut to the sub-$500, the devices have sold well, sources say. The IBM Z50 was initially priced at $999.

Microsoft, for its part, officially says these devices are not going away. But the company admits that the products have faded from view as the software company and hardware manufacturers prepare for the Pocket PC launch on April 19.

"We are getting ready to do software updates, but we have no specific details at this moment," said Phil Holden, group product manager in the mobile devices division at Microsoft, adding that he expects a software release sometime this year. "We're in a slightly different phase there."

Devices such as the Hewlett-Packard Jornada 820 or the Compaq Aero 8000 offer benefits to small segments of the market, called vertical markets. Field sales employees, for example, benefit from Windows CE's "instant on" feature and long battery life and do not require the full functionality of a notebook computer, analysts say.

Windows CE currently accounts for only about 10 percent of all devices sold, while Palm enjoys about 70 percent of the market, according to market research firm International Data Corp. IBM follows several other manufacturers who discontinued their Windows CE products, including LG Electronics, Philips and Everex.

Microsoft signaled that the subnotebook and clamshell products would move toward the fringe when it first started discussing Pocket PC earlier this year. Microsoft said clamshell and so-called Jupiter devices would be sold mainly to corporate customers for limited purposes. If anything, that strategy appears to have eroded Windows CE's already shaky support among device manufacturers.

IBM's experiment went for less than a year. The Workpad Z50 came out last May. The company no longer manufacturers the device and does not sell it on its web site, although some retailers still may have it in stock. By contrast, IBM is currently touting the Workpads containing the Palm OS as an ingredient in its "Edge of Network" or EON strategy. EON is IBM's umbrella strategy for selling hardware and software to corporate customers.

Although the demise of the product effectively ends IBM's marketing of Windows CE for now, IBM is still looking at using Windows CE in the future, the spokesman said.

Among other manufacturers, Compaq and HP, which also are participating in the Pocket PC launch, appear to be ambivalent about the non-handhelds. Compaq currently appears to almost exclusively focus on the handheld devices.

HP is maintaining the status quo with its HPC devices, for now, a spokesperson said. "As of right now, it's still being used," she said. "We don't have any plan to necessarily get rid of it. But I'm not necessarily saying that there will be a refresh, either."

Still, some manufacturers say they are pleased with sales of the products. NEC, for example, is set to release an update to its clamshell device on April 10, said sources close to the company. "It's doing really well," one source said.

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