Microsoft Juggernaut Boosts Hand-Held Computer Market

Those small hand-held computers - often called personal digital assistants or PDAs - are back.

Five years after Apple's original PDA flopped, a new generation of faster, more powerful devices is hitting store shelves. Only this time, the marketing push is being led by Microsoft Corp., not Apple Computer Inc. And somewhere along the line, the name has changed.

"We don't call them PDAs," says Jon Magill, marketing director for Microsoft's consumer-appliance group. He prefers "hand-held PCs."

Even Apple, which popularized the PDA with its original Newton, has dropped the term in talking about its upcoming Newton MessagePad 2000. "The world of hand-held computers is certainly coming of age," says Debbie Carlton, marketing director for Apple's Newton systems group.

The biggest reason for the new excitement about PDAs is Microsoft's release of Windows CE. It's a compact version of the company's popular Windows operating software built specifically for the hand-held market. For the first time, it allows major manufacturers to build devices that run standard desktop-computer software.

That is a big plus for the industry. It means that millions of Windows users could pick up a hand-held computer and begin using it with virtually no training. And they could transfer not only their calendars and to-do lists but full documents from their desktop computers.

Already, seven manufacturers have committed to selling palm-tops based on Windows CE. And three of them - Compaq Computer Corp., Casio Inc., and NEC - have already begun shipping units. According to one estimate, sales of the new hand-held computers will double this year's market for high-end electronic organizers and reach 1.6 million units next year.

"It's huge," says Roy Breslawski, product marketing manager for Hewlett Packard's hand-held division. Corporations that currently buy HP's popular electronic organizer are placing orders roughly 10 times as large for its Windows CE machine, which won't be available until the middle of next year, Mr. Breslawski says.

One of the first Windows CE machines to hit store shelves is the Cassiopeia from Casio. Weighing less than a pound, with a small but usable monochrome screen, the machine looks much like Casio's other personal organizers. What sets it apart is its software.

Using special tricks to squeeze computer files down to a manageable size, Windows CE lets the Cassiopeia display full Microsoft Word word-processing documents, Microsoft Excel spreadsheets, and pages from the Internet. Users can then view and make changes to any documents. Then the system easily transfers the documents back to a Windows-based desktop computer.

Starting at $500, palm-tops aren't likely to be hot consumer devices. Instead, manufacturers are aiming to sell them to mobile workers who need to view documents or send electronic mail on the fly but don't need all the functions of a notebook computer. Such workers include sales representatives who want easy ways to view price and parts lists and jet-set executives who review documents but don't create them. The keyboards of hand-held computers are typically too cramped to allow touch typing.

Apple is also targeting mobile workers with its Newton MessagePad 2000. But the machine, which will cost less than $1,000 when it debuts next quarter, will allow users to do a fair amount of word processing - either through a detachable keyboard or software that turns handwriting into type.

But like Apple's Macintosh a decade ago, the Newton will soon find itself competing against a bevy of hardware manufacturers all standardized on Microsoft software. The initial signs don't look good for Apple.

Last week, for example, Apple's longtime partner Motorola announced it would stop selling its Newton-based PDA (called the Marco) and, separately, signed a deal with Microsoft to bring the Windows CE operating system to its PowerPC microprocessors. The same week, Microsoft announced it was working with Digital Equipment Corp. to bring Windows CE to Digital's StrongARM microprocessor - the microprocessor that will power the Newton MessagePad 2000.

Apple leaves open the possibility that it might get a license for Windows CE. If it does, it would be a stunning signal that the onetime PDA pioneer may be looking to climb on the wagon train rather than go it alone.