Microsoft to unveil wallet PC

Microsoft (MSFT) will introduce its handheld computer technology today, dubbed Gryphon, on the eve of the Consumer Electronics Show.

The software giant is expected to formally unveil these new "wallet PC" devices tonight in Las Vegas at the Consumer Electronics show. Craig Mundie, senior vice president of Microsoft's consumer platform division, is slated to be on hand to introduce the diminutive devices.

The Consumer Electronics Show will be the stage for the rollout of these computers from Casio, Philips, and a host of other vendors.

The latest competitor to challenge 3Com's popular PalmPilot, Gryphon computers will use a trimmed-down version of the Windows CE operating system, code-named Gryphon, that's designed to run on keyboard-less devices.

The new devices will also come from Lucky Goldstar, NEC, and possibly even Sony.

Some will include the ability to act as one-way pagers, which could position the devices as potential replacements for the separate pagers now used by an estimated 80 million people in North America. These personal information managers, or PIMs, will reportedly cost between $250 and $400.

While the market may be large, absolute success is far from certain.

"Gryphon is far more complex to use than the PalmPilot. I don't think PalmPilot users will switch over, but a Windows 95 user might buy one," said one industry source who had seen the devices.

At the other end of the spectrum, industry executives and analysts said that a slew of Texas-sized CE devices will emerge in the first half to challenge traditional Windows/Intel notebooks. They may not be as versatile or powerful as notebooks, but they will cost a lot less.

"I think you are going to see more CE devices that will be based around the notebook size in the first half," said Jim McDonnell, worldwide marketing manager at Hewlett-Packard. "They will all be well under a thousand bucks." HP has yet to announce products in this area, McDonnell said, but added, "look for some very interesting products based around CE."

NEC was the first company to get into this market with the Comdex release of the NEC MobilePro 700, a Windows CE 2.0 device that is larger than current handheld computers.

The devices will also consume less electricity because they will be running on energy-efficient RISC chips, which means a longer battery life. In turn, that means greater mobile functionality and customer appeal, said Andrew Seybold, principal of Andrew Seybold's Outlook, a consultancy for mobile computing technologies.

"There is going to be a battle between $1500 to $2000 Windows 95 notebooks with Pentium processors and the $1000 to $1400 Windows CE notebooks," said Seybold. He thinks that the market for Windows CE notebooks will quickly account for 20 percent of all notebooks sold because of the battery life issue.

Michael Kanellos contributed to this report.