Dell Handhelds To Have Microsoft Operating System

For its emerging line of handheld computers, Dell Computer Corp. has spurned the handheld software offered by Palm Inc., and instead chosen Microsoft Corp.'s Pocket PC software.

The new Dell Axim X5 handhelds, which go on sale next Monday for under $300 -- after a $50 rebate -- aim to take market share from Microsoft-fueled devices made by competitors Hewlett-Packard, Toshiba and Casio.

The devices will be manufactured in Taiwan by Wistron Corp., and include 300 or 400 MHz Intel Xscale processors, said Dell spokesman Cody Pinkston.

Analysts say Dell's ability to keep prices low and still make a profit -- unlike competitors like Palm or Sony -- is a very big deal in the handheld industry. Dell's forthcoming device is similar to others selling for $500 or more.

"It probably is the biggest singular event since Microsoft introduced Pocket PC 2002 to the market," said Todd Kort, a handheld analyst at Gartner Inc. "Dell is going to really upset the entire market."

Kort expects Dell to snag 30 percent of the U.S. handheld market next year by selling more than a billion units.

Dell plans to make the Axim X5 available with two configurations. A cheaper device comes with a cord to connect into a personal computer while the higher-end comes with a cradle.

Dell's use of Pocket PC comes as Microsoft has courted makers of cell phones and handhelds to market devices that run its technology.

Kort said he wouldn't be surprised if Dell eventually begins selling the devices with Palm software once it makes a statement to competitors that already sell Microsoft-based handhelds.

Palm, which currently makes half a dozen handheld models, plans to release a new line this fall. One of the devices will be priced just below $100, in an effort to pull in price-sensitive customers.

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