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Microsoft readies software for H-P handheld device

Microsoft Corp was set to announce a new version of its software to run handheld organizers yesterday, updating a product that has taken sales from market leader Palm Inc in the last year.

The Microsoft Pocket PC 2002 operating system will go on sale on Oct. 4 in new handheld devices from Hewlett-Packard Co. Other companies using Microsoft software, such as Compaq Computer Corp, Toshiba Corp and Casio Computer Co will also produce devices with it, along with some new partners, said Microsoft Vice President Ben Waldman, who declined to specify.

When Microsoft released its Pocket PC operating system in April 2000, its software was used in only a few percent of organizers sold, while Palm had nearly 80 percent of the market.

Microsoft's share is now in high teens on the strength of its appeal to corporate users, while Palm has dropped to the high 60s, according to estimates from market research firm IDC.

``We are at the point where the enterprise is really the battleground, and it's clear the Pocket PC has the advantage there,'' said IDC Analyst Alex Slawsby.

Pocket PC 2002 has the potential to help Microsoft take further market share from Palm, Slawsby said, because its adds features that appeal to corporate customers. Microsoft and its partners are trying to appeal to companies to equip their employees with Pocket PCs.

New features designed for corporate customers include password protection and the ability to forge a secure connection over the Internet to corporate networks, programs and files. The product can wirelessly exchange address book contacts with Palm handhelds.

Still the product, which will be introduced by Microsoft CEO Steve Ballmer at a press events in London and San Francisco on Oct. 4, enters the market as both consumers and businesses are spending less. Slawsby said he expects the product to sell well, but that initial uptake would have been better in a stronger economy.

``I don't think you will see too many companies ditch year- old devices to buy these,'' he said.

IDC projects that by 2005, Palm and Microsoft each will have the same share of the market for software to run handheld devices, with about 40 percent each of the worldwide market and 45 percent each in the US.

Hewlett-Packard, maker of the Jornada organizer that runs on Microsoft's software, is set to announce two new models for sale on Oct. 4. The new models will cost US$599 and US$649 for a model with more memory. Both will offer US$50 rebates.

The new models feature a brighter screen, longer battery life, and interchangeable batteries so users won't have to wait for one to recharge. The new devices are slimmer and three ounces lighter, said Shauna Beatty, North American product manager for Jornada.

The new Jornadas will use Intel Corp's StrongArm processor exclusively, Intel spokesman Bill Calder said. Hewlett-Packard uses both Intel and Hitachi Ltd chips in current models. Intel and Hewlett-Packard will also work together on new wireless programs based on Intel chips, including bringing voice to upcoming Hewlett-Packard handhelds, Calder said.

Compaq meanwhile, will provide a free upgrade to the new software for customers who purchase its iPaq with the older software between tomorrow and Nov 30. Other iPaq users can purchase an upgrade for US$29.95 plus shipping and handling. Compaq will begin shipping iPaqs with the new software after it's released, said spokeswoman Nora Hahn.

The Pocket PC 2002 software also features new graphics and customizable backgrounds, instant messaging software, an improved player for audio and video files, as well as handwriting recognition software and a notification program that causes bubbles to pop up with indications about new e-mail messages and appointments.

The operating system also improves the level of security support for electronic books, fixing a problem that prevented Pocket PC users from reading many books, the company said.

Microsoft will demonstrate the software tomorrow at the Demomobile mobile and wireless technology conference in La Jolla, California.
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