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BIG PLAYERS GIVE HANDHELD PCS NEW LEASE ON LIFE: COMPAQ AND MICROSOFT ARE AMONG THOSE NOW CAUTIOUSLY ENTERING MARKET.

By Published on .

With the backing of the world's largest PC software and hardware companies, a healthy niche market for pocket-size PCs may be opening up.

Marketers are proceeding with caution, however, steering clear of the hype surrounding early flops like Apple Computer's Newton.

After an earlier false start in developing software for handheld devices, Microsoft Corp. in November introduced a scaled-down version of its operating system dubbed Windows CE.

Compaq Computer Corp.'s Mobile Companion, Casio's Cassiopeia and Packard Bell NEC's NEC MobilePro went on sale that same month, with LG Electronics, Hitachi, Philips Electronics and Hewlett-Packard Co. planning to market "HPCs" in 1997.

$500 DEVICES

The $500-range devices, designed as a pocket-size extension of a user's desktop or notebook PC, include a personal information manager, a word processor, and e-mail and Internet capabilities.

Jon Magill, director of marketing in Microsoft's Consumer Appliance Group, called them "a super-peripheral to a PC."

Unlike Windows 95, there is no shrink-wrapped version of Windows CE; customers have to buy the hardware to get the software. So Microsoft plans no consumer ads, instead allocating market-development money for hardware makers to promote their versions.

Compaq and Casio are running print campaigns in business and computer publications from New York agencies Ammirati Puris Lintas and Merkley Newman Harty, respectively.

VARYING PROJECTIONS

Sales projections vary greatly, but analysts on average estimate about 450,000 Windows CE devices will be shipped in the first year-vs. the 45 million PC users who adopted Windows 95 in its first year.

"This is not Windows 95; this is not a PC. It's a small market," Mr. Magill said, adding that he's "pretty humble" about short-term prospects.

Hardware makers are "enthusiastically optimistic, but they have their measure of caution," he said.

Dan Ness, principal at tech market researcher MDI Research, figures Compaq, the No. 1 PC marketer, has the best chance to lead the new category. Yet even Compaq Product Manager Robert Masterson said the company is "taking a cautious approach."

That's not surprising given the underwhelming sales of some high-profile predecessors. Apple's Newton, introduced in 1993, couldn't live up to its early hype.

A Sony Electronics device also flopped, and Motorola in January will halt sales of two personal communicators, Envoy and Marco.

"We're all hoping to grow the market, and make sure the pie is big enough for all of us," Mr. Masterson said.

SUCCESS STORIES

HP, Sharp Electronics and Psion have had the most success in the high-end portable device market, where annual worldwide sales total about 1 million units.

International Data Corp., one of the most pessimistic observers of the overall handheld market, still estimates Windows CE devices will account for more than half the market by the year 2000.

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