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LAS VEGAS--Handhelds, network appliances, industrial equipment, and other non-PC devices are key to the future of Microsoft, which has announced initiatives to encourage use of its operating systems on a broad variety of computing devices.

Chief executive Steve Ballmer took the stage Tuesday at the first Embedded Windows Developers Conference here, to evangelize about the company's next-generation embedded operating systems.

"One of the most competitive battlegrounds for our platform as we face the next five to ten years is the embedded space," Ballmer said. Microsoft will not abandon the PC, "which we know, which we love, which we will maintain," he added. "But it will not be the only important device in the world."

Ballmer's remarks to some 1000 developers focused on the next-generation versions of its two current embedded systems: Talisker, the successor to Windows CE 3.0; and embedded Windows XP (formerly known as embedded Whistler), successor to embedded NT. Unlike its flagship Windows for PCs, these embedded operating systems are hardwired onto device hardware and cannot be changed.

Due to ship around year's end, Talisker will be used on Pocket PCs (and eventually cell phones); Web Companions; and other devices that need a built-in, or embedded, OS that doesn't require much memory. Devices that require a more robust OS and don't place such a high premium on a small footprint will use embedded Windows NT or, later, embedded Windows XP.

The PC version of Windows XP is scheduled to ship in the fourth quarter, so the embedded version is likely to follow. The Xbox game console will use embedded Windows NT. And during his speech, Ballmer showed an embedded-NT-based Bally's slot machine and an embedded-NT-based device for validating and issuing lift tickets at a Vail, Colorado, ski resort.

Implementing .Net

With the exception of the Xbox, most embedded-XP devices are designed for industrial and commercial use, like the Vail lift-ticket processor. But Talisker will appear in a number of consumer products. How might they differ from current Windows CE devices? A key change will be support for Microsoft's .Net vision. That strategy calls for a world in which a new generation of intelligent computing devices will become more useful by communicating with other devices over the Internet.

For example, Talisker will authenticate users via Microsoft's Passport service, making it easier for people with wireless handhelds to shop online. Other .Net features include support for instant messaging (the MSN variety), Universal Plug and Play, and XML. Of course, you might eventually have to pay Microsoft for some of these wireless services (on top of your fees for wireless Internet access).

Talisker also builds in support for Bluetooth, the fledgling standard for short-distance wireless communication between devices. It will give developers greater latitude in picking and choosing which parts of the OS to include in a device, and in designing a user interface.

Other inducements to developers include programming tools that allow faster development of devices, and quicker releases of embedded OSs. For example, Ballmer said embedded XP will appear within 90 days of Windows XP's release. For chip developers, Microsoft is also offering, for the first time, access to parts of the embedded OS code to optimize performance.

Microsoft is being aggressive in the non-PC market in part because it faces more competition there than it does in the PC OS arena. Palm is still far and away the market leader in handhelds (although Ballmer predicted sales of 4 million Pocket PCs in the next 12 months). And Microsoft is facing new competition in its .Net project. Sun Microsystems on Monday announced Sun's answer to Microsoft's .Net strategy, the Sun Open Net Environment.

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