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. Last Updated: 07/27/2016

Pocket PC Gets Leg Up From New Software

NEW YORK -- With impressive new software for handheld computers, Microsoft on Wednesday will mount what industry analysts regard as its first serious challenge to Palm Inc., the leader in the fast-growing market for pocket-sized machines.

Microsoft's new version of its Pocket PC software can play music in the popular MP3 audio format, display electronic books in the first major introduction of the company's Cleartype software and play video clips. Compared with earlier versions of its software, it also has an easier-to-use interface for retrieving personal contacts, schedules and to-do lists - the basic functions of the small electronic organizers, a category pioneered by Palm.

The software also includes a web browser.

In the past, Microsoft's Pocket PC software, first introduced two years ago, has been criticized as cumbersome and hard to use. And the devices made by outside suppliers to run the software have been big and clunky compared with the Palm machines. But in addition to the new software, computer makers including Hewlett-Packard, Casio and Compaq are announcing streamlined new handheld machines that run the Pocket PC programs.

"This represents a significant challenge to Palm," said Michael Gartenberg, an analyst for the Gartner Group, a research firm. Because of the improvements, Gartner is for the first time telling its corporate clients that Pocket PC machines are an acceptable alternative to Palm.

Microsoft's bet is that the handheld market will move toward full-featured machines - more like personal computers and less like electronic organizers.

"Our research shows that people want to do a wide variety of things with these machines," Ben Waldman, vice president of Microsoft's mobile devices division, said.

Microsoft, analysts say, is going after the premium end of the handheld market. The Pocket PC machines have color screens and will sell for about $500. The comparable Palm machine, they say, is the Palm III C, which sells for $450.

This is the third version of Microsoft's Pocket PC software, which uses Windows CE, a stripped-down variant of its PC operating system software. A computer industry adage is that Microsoft does not really make a successful product until version three. Its Windows operating system was not a big success until the third version was introduced in 1990 and, similarly, its Internet Explorer browsing software was lackluster until the third version.

Still, Microsoft faces an uphill struggle in trying to catch Palm. Last year, according to the International Data Corp., Palm machines accounted for nearly 85 percent of the market compared with 10 percent for handheld machines running the Microsoft software.

Palm is the industry standard and it enjoys the self-reinforcing advantages of leadership, even if Microsoft comes up with somewhat superior software. Some 50,000 third-party programmers now write applications to run on Palm's operating system, Palm OS, far more than the number of developers for Microsoft's handheld technology.

"If Microsoft had introduced this software four years ago, it could be dominant today," said David Pogue, author of "Palm Pilot: The Ultimate Guide." "But now it faces an almost hopeless job of catch-up. Microsoft is finally going to find out what it's like to be Apple."