There’s been an unpredictable development in the world of handheld devices. Palm is no longer the king of the hill.

In fact, Palm is struggling. Here’s an article with details of the various problems – an inventory glut, dwindling cash reserves, a depressed stock price, and more. It faces a tough competitor in Handspring, which is marketing a very attractive Palm-compatible device. The tech gossip columnists see Palm as a candidate for acquisition.

But the products getting all the buzz lately aren’t from Palm or Handspring. The tide has turned strongly in favor of the Pocket PC software from Microsoft, running on Compaq’s iPaq handheld, or HP’s Jornada, or Casio’s Cassiopeia. Microsoft struggled with previous releases of software for handhelds, but many people feel it’s gotten it right this time – simple screens, easy operation, 100% compatibility with your desktop applications. It’s got enough of the Windows flavor that it feels familiar right away. I had a chance to see one recently and I was impressed by the screen clarity and depth of color, the character recognition, the features that Palms don’t offer – for the first time I could imagine making it part of my daily arsenal.

Pocket PC might just take over the handheld market. It’s got a relatively small market share now, but it’s moving fast while Palm is stumbling. Look into the marketing hype. The Compaq iPaq 3650 is the hot item right now – Compaq has apparently got a plant in Texas working overtime to keep up with the demand. I might have one soon to show you – this was a very impressive item.

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