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News Review: PDA Wars hot up.

The PDA Wars hot up as Palm posts reduced revenue, cancels an acquisition, and Compaq sells iPAQs like hot cakes. Will Microsoft win the battle of the handhelds ?


Palm have announced reduced revenues expected for the first half of 2001 (i.e. halved !), and has also pulled out of it's proposed acquisition of the mobile systems company Extended Systems Inc. So where does this leave the PDA war ?

Currently, there are 3 main contenders in the "keep it in your hand" arena. Palm were, arguably, the first to break into this market, and now have licensees like Handspring selling competitive products which use PalmOS.

Secondly, there was Psion, who sell keyboard-supplied systems, and do a lot of work with embedded systems - remember the Ericsson mobile phone/organiser ? Psion is not as visible in the maket as Palm, and not as big.

Then there is giant Microsoft, selling the Pocket PC (i.e. the Windows CE operating system, having been re-branded). Up 'til now, PocketPC has been in the minority, with people like Casio and the HP Jornada being the only real users of the OS. Then Compaq hit the streets a year ago with the iPAQ. Suddenly iPAQs are the new designer toy ("but everyone has a mobile phone, it's so common, don't you know ?").

Palm's Problem...

Palm have the problem of being a market leader in what was a niche market, but it has suddenly become a mainstream market. They have a huge installed base, and lots of applications - FireViewer, iSilo, PalmScape, City Map guides, Mailers, Spreadsheets etc. You can use a Palm to connect to the Internet, even as a remote DBA tool for managing Oracle Databases.

One factor that Palm has blamed is the downturn in the economy, which has meant that people have put off buying "nice-to-haves". As a result, they are currently over-stocked. But that's only part of the story. The real issue is that suddenly PocketPCs are eating into Palm's market.

The pressure is on, due in a large part to Compaq. Palm need to innovate - fast.

And in the Compaq Camp...

Basically, the iPAQ is just COOL. The style is what makes it, that semi-retro curved shape, the silver-and-black finish, the 65,000 colours display, all make for a great package. The cradle looks smart on your office desk.

I currently own a Palm IIIc - the colour version, which has something like 256 colours. It's amazing how much clearer, sharper, and more up-to-date the iPAQ looks.

Being Microsoft, the applications appear familiar, InternetExplorer, Excel, WordReaders, PocketOutlook. By capitalising on the familiarity of the Windows PC desktop, they have been able to persuade people to look at these little gadgets as a very simple extension of the PC. People expect Hot-Synch to work - it's all Microsoft.

As a result, Compaq are selling iPAQs faster than they can manufacture them. They are not making much money, since the margins are deliberately low to bring the price down to within Palm levels (notwithstanding, an iPAQ may cost you double a Palm). As for getting a discount on an iPAQ - don't even think about it.

So who will win ?

The battle is basically between PalmOS and PocketPC. The key hardware vendors being Palm and Compaq.

Most users of Palm or iPAQ, according to analysts, are "home bought" - i.e. they have spent their own money to invest in a hand-held, much as they would have got a FiloFax in the past, and used it for Office work as well as personal use.

Both systems are handwriting-recognition, stylus-to-select-anything systems. Both have colour. Both HotSynch via a docking cradle to your PC's Outlook, and many other systems you may need. Both are looking seriously at MobilePhone add-ones, which would make your Palm or iPAQ into a fully-functional mobile phone (including WAP, or - better still - readable html internet browsing and useable mobile email).

At the moment, Palm has the software packages, and the installed user base. Compaq has the marketing style, visual appeal, and the promise of simplicity - important for a "home buy".

Now that the bandwagon has started rolling, application writers are queuing up to write code for PocketPC (using the cut-down versions of Visual C++ or Visual Basic which Microsoft have created). Palm will have to watch out.

Reviewed by Dennis Adams in May 2001

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