Pocket PC sales pass 1 million

Handhelds using Microsoft's Pocket PC operating system marched to the million-unit sales mark in under a year, according to the software giant.

"Shipments technically hit a million after 10 months, but it took us awhile to count them up," Microsoft spokeswoman Crystal Duncan said Tuesday. "We're now over 1.25 million units in the high end of the market."

Pocket PC was introduced in April 2000. It is Microsoft's third attempt at an operating system for handheld devices and is found in products from Hewlett-Packard, Compaq Computer and Casio.

Data from market researcher NPD Intelect shows that Pocket PC-based devices make up 26 percent of U.S. handheld sales in the $350-and-higher range. But in the overall U.S. handheld market, Pocket PC accounts for only about 10 percent of sales. Devices using the Palm OS, including those from Palm, Handspring and Sony, control nearly all the rest of the market.

As Pocket PC-based devices mark their rise, No. 1 handheld maker Palm has been faltering due in part to an inventory glut and the economic slowdown.

IDC analyst Kevin Burden, who was a bit surprised by the million-unit milestone, said the news is a testimony to the buying power of corporations.

Traditionally, Microsoft and its Pocket PC device partners, including Compaq and HP, have done well selling to large companies, which many analysts recognize as the next big area for handheld sales growth.

"Pocket PC's news shows what the enterprise market means to (handheld) sales," Burden said. "Enterprise accounts buy in large quantities, so one order can mean thousands of units. That's a lot different than trying to sell one unit at a time in retail."

The biggest potential blow for future growth for Palm came from last week's dissolution of its planned acquisition of Extended Systems, a company that helps corporations give employees access to corporate software via wireless devices. The deal would have given Palm established sales channels to large companies, Burden said.

Palm asserts that it will continue to target the corporate market aggressively and will keep working with Extended Systems.

In related news, Microsoft on Tuesday announced the availability of the its streaming audio and video player, Windows Media Player 7.1, for Pocket PC. The software giant also said it will team with Intel to optimize Windows Media audio, video and digital rights management technology for Intel's XScale architecture, which is expected to power next-generation handhelds and cell phones.