January 5, 2000 2:10 PM PST

Compaq, Casio, HP handhelds to offer AOL email

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Casio, Hewlett-Packard and Compaq handheld users soon will be able to access America Online email, but the alliances raise new questions about the ever-changing competitive landscape in the burgeoning device market.

Under the agreements, AOL is developing software that will allow Compaq Aero, HP Jornada and Casio Cassiopeia devices to access AOL email. The software will be distributed through the handheld makers via a free download to AOL's 20 million members, the companies said.

The twist is that Compaq, HP and Casio are three of the bigger supporters of Microsoft's Windows CE operating system, and Microsoft and AOL are engaged in a bitter battle for consumer loyalty.

As such, AOL has forged a relationship with Palm Computing, Microsoft's biggest rival in the handheld market, that includes an equity investment in the firm.

"We know see related story: Evidence mounts of exodus from Windows CE that AOL members are increasingly interested in new devices that will enable them to have access to elements of the AOL experience anywhere, any time," Barry Schuler, AOL's president of interactive services, said in a statement. The agreement furthers the "AOL Anywhere" campaign to bring the online service to non-PC devices, he said.

Previously, non-Microsoft email users were limited to accessing their corporate or personal email through synchronization software on the devices.

The deals are clearly a win for Windows CE-based handheld users, but the implications for the rest of the market are unclear. Moreover, many analysts view handhelds as the "lame duck" of mobile computing; they say the real battle will be fought on so-called smart phones and wireless devices, and the alliances struck today are merely laying the groundwork for that fight.

As rivals, Microsoft and AOL have been vying for pole position in the wireless device and Internet appliance market. Both companies have attempted to parlay previous wins--namely, AOL's success among dial-up PC users and Microsoft's alleged monopoly in the desktop operating system market--to establish preeminence among future online users.

But despite their rocky relationship, the companies have obviously agreed enough to allow Windows PC users to access AOL, so expanding the relationship to smaller devices isn't that much of a surprise.

Palm--which see related story: AOL and Microsoft: Goliath vs. Goliath currently enjoys about 80 percent handheld market share in the United States, according to recent research from International Data Corp.--listed AOL as one of its major investors in recent documents filed with the Securities and Exchange Commission in preparation for its coming initial public offering (IPO) and spin-off from parent company 3Com.

"This is completely separate," said an AOL spokesperson, asserting that the deals with Compaq and Casio do not have an impact on the company's relationship or investment in Palm. "This is just another one of the benefits of being an AOL member."

Despite Palm's winning record, these businesses are still quite young, and Microsoft, with its deep pockets and commitment to the wireless market, can't be counted out yet.

Along these lines, Microsoft chief executive Bill Gates is expected to announce the newest version of Windows CE for handhelds in his keynote speech at the Consumer Electronics Show in Las Vegas tonight. Dubbed the Pocket PC, the new devices are rumored to offer improvements in usability and connection options. In addition, Microsoft is working on a variety of wireless devices.

 

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