Microsoft Set to Unleash Pocket PC 2002

With Microsoft Corp.’s Pocket PC handheld operating system gaining ground on PalmOS in both Europe and the U.S., the Redmond,
Wash.-based software titan Thursday confirmed rumors that it will unleash the latest version, Pocket PC 2002, on Oct. 4, 2001, with
simultaneous events in San Francisco and London.

Earlier this month, Gartner Dataquest released a
showing that Compaq’s line of iPAQ Pocket PC handhelds dramatically increased its market share despite an industry-wide 21
percent decline in overall handheld shipments. The iPAQ, which ended the first quarter of 2001 with a 7.8 market share, vaulted to
16.1 percent in the second quarter. Palm, meanwhile, slipped from more than 50 percent in the first quarter to just over 32 percent.
Handspring’s Visor, which utilize PalmOS, lost its second-place ranking, slipping from 15.9 percent to 10.7 percent market share.

Microsoft is looking upon Pocket PC 2002 as a springboard to help Compaq and other hardware partners — including Casio Computer
Corp., Cesscom, Compal Electronics Inc., Hewlett-Packard Co., HTC, HTW, Intermec Technologies Corp., Legend, Mitsubishi Electronic
Corp., Sagem, Symbol Technologies and Toshiba Corp. — gain even more ground on Palm’s competing offering. And to do that, Microsoft
is targeting a market that has been more receptive to its more robust — and more expensive — offering: the enterprise.

“When the Pocket PC launched in April 2000, it redefined what was possible with a handheld device,” said Alex Slawsby, an analyst
with IDC. “With Pocket PC 2002, we expect Microsoft and its partners to continue to set the bar for the enterprise-focused, high-end
PDA category.”

Perhaps the clearest example of Microsoft’s efforts to capture enterprise interest is support for the ability to connect to
corporate information via a virtual private network (VPN). The feature is part of Pocket PC 2002’s new Terminal Services
application, which supports strong passwords.

Pocket PC 2002 also comes ready-equipped to handle wireless local area networks using the 802.11b standard, personal area networks
using Bluetooth, and to connect to wide area networks via CDPD, GSM or two-body solutions using operator networks. Such wireless
connectivity makes possible another feature Microsoft hopes will prove attractive to IT managers: the ability to remotely control
Windows operating system-based PCs or servers — also a part of the Terminal Services app.

However, just because Microsoft is aiming for the enterprise, that doesn’t mean it’s ignoring consumers. Pocket PC 2002’s display
will be customizable through a “skinning” feature, and the company has also added auto-configuration options and attempted to make
interoperability with Palm-based devices easier. Microsoft has also included a new Windows Media Player 8 with support for the
latest Windows Media Video and Audio 8 technology. The new OS also includes MSN Messenger Service, support for ActiveSync 3.5 —
which allows users to synchronize their e-mail inbox subfolders — and capacity for antivirus software.

“Pocket PC has set the technology standard for PDAs,” said Ben Waldman, vice president of the Mobile Devices Division at Microsoft.
“Now Microsoft is raising the bar once again to bring even more value to customers. With unrivaled business and consumer
applications, Pocket PC 2002 is the most capable device on the market.”

Still, Palm isn’t lying down. The company recently received Federal Communication Commission approval for a new wireless device, the Palm i705,
which will feature always-on e-mail capabilities.

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