By Cora Nucci ,
Palm Inc. and Microsoft Corp. are going mano a mano for dominance of the $1 billion US handheld device market.
Microsoft (stock: MSFT), lagging far behind Palm (stock: PALM) in the hot mobile devices sector, is changing tactics and rolling out new print ads designed to promote its Pocket PC platform. By abandoning its initial "Can Your Palm Do That?" campaign in favor of the more positive "Go Wireless" tagline, Microsoft is retiring the negative attitude, but not its quest to win market share.
Times, apparently, have changed. "Nine months ago, [at launch] the ads were positioned to educate users about the differences" between the two systems. Now the thrust is to showcase the functionality of the Pocket PC," said Ed Suwanjindar, product manager, Mobile Devices Division at Microsoft.
The new ads feature shots of Pocket PC color screens over black and white photos of users. The copy touts wireless services from GoAmerica and OmniSky.
Palm's reaction? "We have a much bigger message to deliver," said Satjiv Chahil, Palm's unruffled chief marketing officer.
After all, in the consumer realm, Palm is the clear champ, with 60 percent to 75 percent of the market depending on the research group. Devices based on Microsoft's Pocket PC platform account for about 15 percent according to Ken Dulaney, vice president of mobile computing at Gartner, San Jose, Calif.
There is disagreement, however, among analysts over which technology dominates in the enterprise. "Palm is as dominant in the enterprise space. With the Pocket PC it's much more difficult to do data entry. The Palm is more compact and efficient," Dulaney said.
But Ken Smiley, senior industry analyst at Giga Information Group, Santa Clara, Calif., said it depends on the application. He noted that a major car rental agency recently choose Hewlett-Packard's (stock: HWP) Jornada, a Pocket PC, over the Palm system because it wanted a larger screen and better keyboard functionality. The device's clamshell design was regarded as an additional plus by the customer.
Compaq's (stock: CPQ) iPaq, and Casio's Cassiopeia series also run on the Pocket PC OS.
Of the 10 to 12 million handheld devices in use today, 1.5 to 2 million enterprise users are struggling with enterprise integration. The high cost of training, support, and spotty wireless service are obstacles to widespread use at the moment. But Smiley predicts use "will accelerate as wireless service improves ."
Both analysts see Microsoft's technology as superior to Palm's. "The Pocket PC, from a pure technology standpoint is head and shoulders above the Palm," said Smiley. "The Pocket PC's technology is advanced. It has a lot to be proud of," agreed Dulaney.
But for the Pocket PC to take off, Smiley suggests it needs "compelling software, better marketing, and the right wireless or Web-based services delivering content and applications to the devices."
Microsoft is betting that users are ready to move beyond the "basic PIM functionality" offered by Palm and step up to personal devices that can do more, a Microsoft spokesperson said. "They want to be able to remotely access their e-mail and the Internet, and Pocket PC offers a much wider choice of wireless connectivity options, faster connections, and access to the entire Web in full color."
Palm has been criticized for its poor wireless capability. "Only about 40,000 of the existing 100,000 to 150,000 Palm VII users subscribe to wireless service," said Smiley, a fact he attributes "poor coverage on a proprietary network." Chahil said the use of wireless slumped among Palm VII users because some of the necessary hardware was in short supply, but the company is now caught up.
Why then is Microsoft so far behind Palm in market share? For starters, Microsoft came late to the party. The Pocket PC platform, launched in April of last year, was the company's third attempt to crack the handheld sector. Palmtops running Windows CE were clumsy, power-hungry predecessors of today's sleeker designs.
Palm introduced the first Palm Pilot in 1996.
Microsoft also "did a miserable job with the software. They were arrogant and there was mismanagement early on," explained Gartner's Dulaney. He believes the current team is doing a better job.
While Microsoft hopes to turn up the heat, Palm continues to capitalize on its position in the top spot.
The company made a splash last August with its Claudia Schiffer Edition Palm Vx. And former Chicago Bulls star Michael Jordan is rumored to have signed a deal for an MJ edition Palm. Chahil would not confirm it, but said Palm has received "proposals from achievers from all fields: music, film, sports."
In addition to Schiffer, Palm has an OEM agreement with highly effective person, Franklin Covey .
Microsoft's Suwanjindar said there are no plans to create a celebrity edition Pocket PC.
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