Casio announced today that it is boosting production of the Cassiopeia handheld PC that runs Windows CE. The company expects to sell 500,000 units this year, far more than originally estimated. To meet the unexpected demand, Casio will more than double the capacity of its plant in Japan this Spring. Two thirds of the devices will be sold in the United States, with the remainder split evenly between Japan and Europe.

Handheld PCs (HPCs) are only the beginning of Microsoft's plans for the small footprint operating system. The OS vendor sees Windows CE as the core component of numerous devices with varying form factors. Testing of Windows CE 2.0, which features support for color, begins soon