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Pocket PC or Palm: Which Will Win Out?

Call it the clash of the tiny titans. The two main electronic organizer operating systems are headed for a showdown, and the outcome rests in users', er, palms. For the moment, PDAs based on the industry-standard Palm operating system continue to take the lion's share of the market; last year Palms accounted for about 62 percent of sales in the category of keyboardless "handheld companions." But analysts predict that by 2004, the Pocket PC will own as much as 40 percent of the market, with Palm falling to 45 percent.

Pocket PCs are expected to woo nonbusiness users and corporate types alike by virtue of their bright 240 by 320 screens, faster StrongARM processors, and familiar Windows-like interface and applications. Palm PDA owners tend to be fiercely loyal to their devices, however, citing streamlined operation and longer battery life as key benefits.

Strategists at 3Com and Microsoft predictably disagree over what users want. "We're not trying to produce a night light," says Palm's chief competitive officer Michael Mace. "We're trying to give users the right balance of weight and battery life. When you try to make a handheld act like a PC, you end up screwing it up."

Ed Suwanjindar, product manager of Microsoft's mobile devices division, praises the Pocket PC's appeal to sophisticated users who've decided they want more. "We're striving for depth. Our users have decided that if they're going to carry around a device, they want it to do more than just hold phone numbers. They want to read Excel and PowerPoint and get e-mail attachments. They want to enjoy music and read e-books."

Meanwhile, both camps are busily nudging their products toward the middle. The next version of Microsoft's PDA operating system will be designed to conserve power, says Suwanjindar. To catch up with Pocket PCs, Palm is planning to release Palm OS 4 later this year; it will support faster processors and increase screen resolution, says Palm's Mace.

Work toward a common expansion device standard continues, and Palms and Pocket PCs due out later this year are expected to standardize on the new Secure Device (SD) slot. Based on the MultiMedia Card specification, postage stamp- size SD cards will add storage as well as LAN and Internet connectivity.

However they evolve, analysts expect that both Palm-based and Pocket PC PDAs will secure their marketplace niches. "The overall demand for PDAs will continue to grow over time and there will be more than enough room for everyone," says Gartner Group analyst Ken Dulaney. "People are pretty committed to the Palm. The gem of the product is the software, which has not changed much over the last four years. But Microsoft has been creeping up on them."

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