With many thanks to Keith Furman, who provided a report directly from the PocketPC launch in New York City Wednesday. --Paul

"Can your palm do that? Not unless it's holding a Pocket PC." This Wednesday, Microsoft Corporation finally unleashed its third major revision to Windows CE with the launch of the PocketPC at Grand Central Terminal in New York City. Microsoft CEO and president Steve Ballmer was on hand with several launch partners, introducing the world to what will likely be Microsoft's final attempt at stealing marketshare from Palm Inc.'s popular Palm devices. In fact, Ballmer said he regretted that Microsoft didn't have a stronger presence in the palm-sized PC market, while noting that the market was still in its early stages. According to IDC, 4 million palm-sized devices were sold in 1999; the company predicts that 6 million will be sold this year, with the number skyrocketing to 67 million by 2004.

Ballmer admitted that Microsoft has made some serious mistakes with Windows CE in the past, but believes that the company's latest attempt will finally give consumers what they are looking for. Microsoft has spoken to customers about Windows CE to find out what they've done wrong in the past. According to Microsoft, customers praised previous Windows CE devices for their excellent hardware support, expandability, and the ease of creating custom applications. But customers complained that Windows CE was simply too hard to use and not small enough. Most egregiously, customers said that the user experience on previous devices was extremely poor. We can chalk this up to the company's bone-headed decision to simply port the Windows user interface to its hand-held OS, while PalmOS-based devices, meanwhile, have soared in popularity due largely to their simple interface.

For the PocketPC release, Microsoft focused on six key themes, including design (people want a simple OS running on a small, easy-to-use device), PIM (Personal Information Management), simple without comprises, a product that grows with your needs, full Web and wireless connectivity, a platform for enterprise solutions; and finally, a platform for the individual user.

Four vendors announced devices Wednesday, including Casio, Compaq, Symbol and Hewlett-Packard (HP). Casio released a single model this week and plans to roll out three more in the next few weeks. Casio's products target a younger market and are being marketed heavily in AOL Anywhere promotions, interestingly. Compaq announced a black and white PocketPC device that appears to be an update to the existing Aero 1500. The company also announced a new line of thin PocketPC devices that will be marketed under the iPaq name; these are scheduled to ship in June. Symbol showed off a rugged device that includes wireless networking and a barcode reader; this is geared toward companies such as UPS that will require such functionality. HP announced the immediate availability of a new line of Jornada devices, which will ship in black and white and color variants.

In sharp contrast to previous versions of Windows CE, the PocketPC user interface is pretty impressive, and much easier to use. The Start button, with its corresponding menu, is now located at the top of the screen, because Microsoft found that most people using small devices look at the top of the screen first when they need to begin a new action. Other menus now scroll up from the bottom of the screen, however, instead of the top so that your hand doesn't block the screen when you are selecting items (presumably, the position of the top-mounted Start button prevents this; one wonders about lefties however). Microsoft has also introduced a new feature called "tap and hold" that lets you tap the screen and then hold down the stylus to get access to all sorts of different menu options; it's similar to right-clicking the primary mouse button in the desktop versions of Windows.

One of the biggest changes with these devices is a new focus on the Internet. Unlike solutions from other companies, Microsoft has decided to give users full Web support with a new version of Pocket Internet Explorer (IE). Pocket IE allows you to view any Web page from a Pocket PC device, without any loss of content, because it supports a full range of Web standards, including HTML 3.2. It also supports a cool new feature that resizes Web pages automatically so that they properly fit the small screens on these devices. Another new feature called Mobile Favorites allows you to mark Web pages so that you can download content and browse the sites when you are offline. For email, AOL Mail, Hotmail, IMAP4 and POP3 e-mail are all supported in Pocket Outlook. And because Microsoft research shows that 1-in-5 emails include attachments, the PocketPC provides support for Word and Excel attachments out of the box. And if you've just got to be connected all the time, PocketPCs even support wireless modems and the new Bluetooth wireless standard.

The PocketPC is also notable as the first publicly shipping product to incorporate the ClearType technology announced by Microsoft in November 1998. In addition to Microsoft Reader, which uses this technology, the Pocket PC also includes Microsoft Media Player 7, which allows users to play MP3 and Windows Audio (WMA) files in stereo. And anyone who purchases a PocketPC this year will receive a free fun pack from Microsoft that includes Pac-Man and a host of other cool games.

Of course, the big question with this release is its continued viability: While Palm owns a commanding 80%+ of the market for palm-sized devices, the number of hardware makers supporting Windows CE has shrunk in recent years. And Microsoft is mum about Handheld PCs and other previous-generation CE devices: "We don't have an announcement about that right now," was the only answer we got from the company in answer to our queries. Color-enabled PocketPCs are expensive, falling in the $500+ range, and it's hard to imagine anyone being interested in black and white units, which look sickly in comparison. And even though the units were launched today, most color devices are still months away, giving Palm enough time to slash prices and maintain its lead. While it's easy to be blown away by some of the features offered on these new devices, in the end, it's hard to imagine Microsoft succeeding in a market so thoroughly dominated by another company. Ironic, isn't it