CE losing Palm arm wrestle

Microsoft can't get a grip on handheld computing

As the Palm OS continues to grow in popularity, some handheld hardware makers are abandoning rival Microsoft's Windows CE. To compound matters, the company is falling short in its efforts to simplify an operating system that developers say is too complex for palm-size devices.

The next version of CE for palm-size devices, which comprises CE 3.0 and an additional software layer, is in early testing and is likely to miss Microsoft's initial target to ship by year's end.

The main attraction of the new palm-size operating system version, code-named Rapier, is supposed to be a simplified GUI that takes a lesson from 3Com's Palm OS. But, according to some developers testing Version 3.0, changes to the GUI are superficial at best. For example, certain icons and functions are more accessible in menus than they are in Wyvern, the current GUI.

A new icon for the "@" symbol makes it easier to create e-mail messages, and new pen and keyboard icons ease toggling back and forth between handwriting and tap-typing, testers said. But other features, such as the Tools menu and the Start menu, have simply been moved, not improved.

"They've still screwed it up," said a software developer who designs products that run on both the Palm OS and CE. "I don't think Microsoft realizes that they have to get rid of the Start menu. Moving the Start menu doesn't reduce the number of taps." "I don't think CE translates well into the palm form factor," said Michael DeNeffe, director of mobile PCs at NEC Computer Systems Division. "It seems asinine that you have to go to a Start menu on a palm-size device."

NEC builds tablet-size CE devices for vertical markets, but the company scrapped plans for developing a palm-size CE device after building a prototype two years ago. Motorola entertained developing software for CE two years ago but decided against it due to a lack of interest in the operating system by top management.

Last month, consumer electronics giant Philips Mobile Computing Group, announced it was dropping its Nino line of CE devices, saying it wasn't satisfied with the market and wanted to focus on smart phones.

Microsoft may be harming its CE efforts by trying to stretch the platform too far, developers said. The company markets CE as a platform for mininotebooks, pen tablets for vertical markets, embedded systems and palm-size devices.

"They need to decide what they want to be when they grow up," said another CE developer, who requested anonymity.

Microsoft officials declined to comment for this story. As Microsoft struggles with CE, the Palm OS from 3Com's Palm Computing division has become the hands-down favorite in the palm-size market. Palm OS is expected to grab 80 percent of the market for palm-size PCs this year, according to International Data Corporation, in Framingham, while Microsoft's market share will remain stagnant at about 13 percent.

To jump-start interest in CE, Microsoft is looking to Rapier along with a couple of initiatives announced this week. The company is creating a venture with NTT DoCoMo to deliver wireless services in Japan. Microsoft is also investing in Vadem, a San Jose, , startup that focuses on handheld computing. Under the terms of the latter agreement, Microsoft will retain the rights to Vadem's handwriting and ink compression technology.

CE's major flaw, some users say, stems from Microsoft's decision to mimic the look and feel of the traditional Windows GUI on a much smaller form factor.

"They started out with an operating system that was lame on the desktop, and they're sticking the same thing on a far more underpowered platform," said Steve Durst, an engineer at Skaion , in Arlington, and an avowed fan of Linux and the Palm OS. "How can they expect that to succeed?"