COMDEX - Despite MS, developers stick with Palm ... for now

Despite the growing traction that Microsoft Corp.'s Pocket PC handheld operating system is gaining, especially in the corporate market, developers of Palm OS applications exhibiting their wares at the Comdex trade show here are confident in Palm Inc. -- for now, at least.

"The conventional wisdom is that Microsoft is gaining a lot of momentum ... but Palm is still the market leader," said Alexander Hinds, the president and CEO of Blue Nomad LLC, makers of the Wordsmith word processing application for the Palm OS.

"I'm still very excited about the platform," he said, adding, "I'm not concerned at all, there are a lot of positive things happening."

Glenn Bachmann, president of Bachmann Software and Services LLC, a software developer that makes a number of Palm applications, largely agrees with Hinds.

"There's still a tremendous amount of opportunity in the Palm software area," he said.

One of the reasons for the sense of impending doom ascribed to Palm by many is Microsoft's push into the enterprise market, an area Microsoft has traditionally dominated.

Palm "definitely (is) going to face stiff competition from Pocket PC," according to Kevin Shahbazi, vice president of business development at Trust Digital LLC, which makes a series of encryption products for the Palm OS and has just released its first Pocket PC application.

Shahbazi expects that the Pocket PC will post large gains in the market in the next year and that Palm will need to work more closely with third party developers who are already strong in the enterprise in order to counter that move. Trust Digital's security applications have helped Palm close enterprise deals in the past, he said, adding that Trust Digital products are already in use at the U.S. Federal Bureau of Investigation and U.S. Department of Justice, among other government agencies.

Pocket PC may have the momentum right now, but Palm still has a solid foundation and a strong installed base to work from, he said.

Another observer who sees Palm's installed base as continuing to be one of its strengths is Travis Glasson, a research analyst at International Data Corp. (IDC; IDC is a subsidiary of International Data Group Inc., the parent company of IDG News Service). IDC projects that Palm will continue to remain the market share leader in the handheld market for the next five years, he said in an interview conducted before Comdex.

Despite this projection, "Microsoft is going to be especially effective at wooing corporate accounts," Glasson said.

Many observers tout the functionality of the Pocket PC platform, with its native support for full motion video, digital music and high-resolution color screens as major selling points for corporate customers. This situation hasn't been helped any by the length of time Palm has let go by between major upgrades to its operating system. Palm OS 5.0, a major upgrade that will mark the platform's transition to the more powerful StrongARM processor, is set for sometime in 2002. Palm currently uses Motorola Inc.'s 33MHz DragonBall processor in its devices.

"There is a little more excitement in Pocket PC, I'm not really sensing the same level of excitement in the Palm community," said Blue Nomad's Hinds.

"A lot of Palm users are sensing a real lack of innovation" on the Palm platform when compared with the new operating system and devices being offered for the Pocket PC, he said.

"I don't think the transition to StrongARM in and of itself can (rekindle that excitement)," he said, adding that Palm needs to offer compelling new features like higher-resolution screens.

"It makes me nervous that the Pocket PC has continued to evolve and the Palm OS has lagged behind," said Paul Moreton, vice president for marketing and sales at Palm developer Cutting Edge Software Inc. Cutting Edge makes the QuickOffice office suite for Palm OS as well as a conferencing program that allows for workers to remotely collaborate on projects using Palm devices.

Moreton, however, expects his nervousness to dissipate with the release of the 5.0 OS and says that the company is "considering" bringing its applications to the Pocket PC.

"If there wasn't Pocket Excel and Pocket Word (two Microsoft applications for Pocket PC), we'd be on that platform (Pocket PC)," he said.

Despite their concerns, Blue Nomad's Hinds said that his company is not looking at the Pocket PC platform and Bachmann is only evaluating the possibility.

Blue Nomad's plans could change as installed user-base figures change, said Hinds.

"Purely as a business decision, we (would) consider developing for Pocket PC, regardless of which platform I prefer," he said. "We will develop for the platform that has users."

The notion that there will have to be a single winner in the handheld area, however, may be false, according to Glenn Bachmann.

"There's a lot of room for Palm, a lot of room for Microsoft and for other companies that have yet to make their names, he said.

The Palm OS "is a fine platform" for most users, he said.

"By and large, people are doing very normal business things on the (Palm OS)" and don't need the advanced multimedia features that Pocket PC offers, he added.

IDC's Glasson agreed, saying, "there's not going to be one handheld platform for all users."

Palm produces "really great products for (end) users," while Microsoft is going to be strong in the enterprise, he said.

"There is definitely room for multiple players" in the market, he added.