Then came Compaq's immensely popular iPaq running Windows CE on a brawny Intel StrongArm processor and sporting a beautiful display and multimedia capabilities that caught the eye of the hippest professionals. A colleague of mine, a long-time Palm evangelist, surprised me one day by showing off his new iPaq. He had made the move. Then I discovered that by using a PC Card sled, I could turn the iPaq into a fairly functional node on an 802.11 wireless LAN. This wasn't quite enough incentive for me to relinquish my Palm PDA, but it sure made me think about it.

Now comes the next generation of the Pocket PC OS and an assortment of new devices not only from veterans, such as Compaq, Casio and HP, but also from Acer, NEC, Toshiba and others. And while the OS enhancements are evolutionary in nature, Microsoft has widened the functionality gap. Most IT managers and software developers with whom I've spoken have come to the same conclusion: While PalmOS may be adequate for personal-information management and simple applications, Pocket PC is a superior platform for mobile-application development. Sure, organizations may still get some return on investment by equipping employees with personal organizers, but the real value comes when strategic applications are mobile enabled. A robust PDA isn't the only thing you need to pull off that trick -- you also need effective mobile middleware, wireless communications services and scalable device management -- and choosing a device platform that ties your hands isn't a great place to start.

Has Microsoft extended its OS dominance from the desktop to the coat pocket, leaving Palm to survive on the crumbs in the low-cost/low-margin consumer PDA market? Evidence suggests this is the case. While Palm m500 series devices are nice, they aren't really competitive featurewise with Casio, Compaq and HP units that cost only slightly more. At the low end, however, PalmOS-based devices like the m105 still provide the best value. So despite losing market share at the high end, Palm still owns a substantial majority of the installed PDA base.

Palm management knows the company's next move is critical. It needs to get to the next generation of PalmOS devices -- and it needs to do it fast. That next generation should include a faster CPU platform, a more robust network subsystem (including Bluetooth support and integrated always-on wireless WAN services) and enhanced display capabilities. While some may argue that Research In Motion could give Microsoft some added competition, it's likely that Pocket PC devices soon will possess many of the attributes that have made RIM's BlackBerry such a success. It's up to Palm to provide the competitive alternative. If I were a handicapper, I'd give Palm even odds.