A widely recognized, easy-to-use and even beloved computer with a home-grown operating system is challenged by a number of upstarts, all powered by so-so software from an aggressive company that wants to win at any cost.
Everyone knows how that tale played out: Apple Computer Inc. may still have its devotees, but it lost the mass market to the IBM PC and its clones, giving Windows a lock on the operating system business and rendering its maker, Microsoft Corp., all-powerful.
Now, with the coming boom in wireless information devices, there's a new playing field that Microsoft seeks to rule. The stakes: control of millions of intelligent gadgets in homes, offices, cars, pockets and purses. Its tool: a stripped-down version of its Windows operating system, called Windows CE.
The initials stand for nothing specific and many things in general, Microsoft says: compact, connectable, compatible, companion. At the moment, the biggest market for Windows CE is in the field of personal digital assistants, where the Palm devices of 3Com Corp. rule the roost, and the market for "sub-notebook" computers, the smallest type of laptops.
"We see these devices working to augment, to supplement, to enhance the PC," said Phil Holden, a group product manager for Microsoft. "Customers want to take business and personal data with them in a range of devices, getting the appropriate data at the right time."
More than a million such devices now run Windows CE, Microsoft says. But if things work out the way the company wants, that will be just the beginning. The company also has high hopes for putting Windows CE in cell-phone-based assistants, digital cameras, game machines, automobile PCs (which access e-mail through a cellular phone), TV set-top boxes and a host of other electronics products.
Never underestimate the world's largest software company. It's "the odds-on favorite to win" in the digital-assistant market, said a report by the Aberdeen Group, a Boston consulting firm, that was so enthusiastic it's featured on the Microsoft Web site.
"Windows CE will rapidly become the de facto standard," the report concluded, partly because of its high level of compatibility with the full-scale Windows and other Microsoft applications, and also because of the company's enormous technical, financial and marketing resources.
Yet Windows CE, like many things Microsoft, is the subject of controversy and downright slurs. It's an "idiot savant," Bill Baxter recently told a reporter.
That doesn't sound as critical as some other things that have been said about the system until you consider the source: Baxter is chief executive officer of BSquare Corp., a software engineering firm based in the state of Washington that specializes in Windows CE and in fact helped Microsoft develop it.
Baxter declined to make himself available to expand on his comments. But his spokeswoman said that the comparison meant that Windows CE "does do some things well and some things not so well."
Forrester Research analyst Tom Rhinelander emphasized the latter in a report a year ago titled "Windows CE Falls Short." He concluded that the system "will achieve limited consumer electronics success" and said "the industry will choose the most practical and cost-effective solution"--which will only sometimes mean Microsoft.
These days, Rhinelander is, if anything, even more downbeat. "Windows CE is being promoted into a lot of products, but the three most visible are all arguable failures," he said. "The original hand-held notebook computer is a dying breed that is being supported by very few companies, and its larger version is not doing well, either. The Palm knockoffs have not found favor with customers, despite color screens."
The problem, he said, is that Microsoft is "the worst enemy of its own product."
"CE is an okay operating system, but they stick it in your face," Rhinelander said. "It still has the Windows look and feel, but on a small device there's no room for such a cluttered interface. They didn't get the message put out by Palm, that hiding complexity is the way to go."
The CE machines not only look more complex, they are. "Microsoft is used to building fairly large, general-purpose pieces of software that tend to be flexible," said Peter Varhol, who holds the title of technical evangelist for the software developer Compuware Corp. "You can do word processing on a PC and also use it to compute atmospheric conditions for weather analysis. They tried to take that model down into a smaller device, and have probably found it doesn't fit that well."
But Varhol, who just published a lengthy analysis of Windows CE in the journal Electronic Design, thinks the ultimate limitation of hand-held computers is not specific to Microsoft. Instead, it's that most people will find them, well, too small.
"You cannot touch-type on them," he said. "There's a physical limit to how small the keys can get. This is the real limiting factor, not the electronics or the software." That won't change until there's really good voice recognition and voice output, which will happen "next year or in a hundred years," he said.
Holden, the Microsoft product manager, said the company had "learned a fair amount during the 2 1/2 years it had been in this marketplace" and "some competition will be good for us in the long term."
They'll certainly get that. A much bigger threat to Windows CE than the Palm may be Symbian Inc., the infant firm--it'll soon celebrate its first birthday--spun off from Psion PLC, a British maker of wireless computing devices. Co-owners of Symbian are the cellular phone powerhouses Ericsson AB, Motorola Inc., Nokia Corp. and, as of last week, Matsushita Communication Industrial Co.
Symbian is developing software called EPOC that will run the next generation of Palm-type devices, which will include cell phones and probably start becoming available from its parent companies starting next year.
The idea behind all these competitors linking up is that they realize "they need to work together to grow this industry," said Alasdair Manson, Symbian's director of evangelism. "They're cooperating to create the market for these devices, and within that context the devices will compete on their own merits."
At the moment, of course, it's good public relations for Microsoft to be seen as having lots of competition, since the government contends in the ongoing antitrust trial that it illegally squelched its rivals in the market for Web browser software.
Before the end of the year, the company will introduce version 3 of CE, which will probably gain it more brickbats. "Windows CE is like the weather. Everyone criticizes it," said Rick Doherty of Envisioneering Group, a consulting firm.
Still, he counts himself a fan. "I would say we've been cautiously optimistic for quite a while. And at this point, we're less cautiously optimistic. Microsoft just has to make the next version more modifiable."
It would also be nice if the new generation of assistants "had a two- or three- or four-year operating life, instead of only a few months," the consultant added. "People don't like to change their wallet every six months, and they don't want to change their organizer that often either."
Doherty, it should be noted, was talking on a commuter train as he returned to his suburban office from a Manhattan meeting. There, he confessed, he took notes on his Palm V.
"I didn't want to have a large device in my hands. I wanted to look stylish and cutting-edge. In this case, the cutting edge is the Palm V. But tonight I'm going on a trip, and I'll take my CE. It's got more communications capability and a longer battery life."
Clearly, the war for this new market is in the early stages.
Staff researcher Richard Drezen contributed to this report.