Hand-Held Devices Steal Spotlight at PC Expo

The biggest annual computer trade show here began as usual Tuesday, with technology companies showing off their latest gadgets and offering their views of the future.

But some things are different at this year’s PC Expo. Like the fact that nobody wants to talk about PCs.

The keynote speech was by Jeff Hawkins, co-developer of the Palm Pilot. Compaq Computer Corp., the world’s largest PC maker, didn’t bother to have its own booth. And the event’s hottest debate bypassed PCs entirely, focusing on whether hand-held computers will someday overtake cell phones.

Even Dell Computer Corp. Chief Executive Michael Dell, in a meeting with reporters, was a bit defensive about the PC business. He noted that the leader of the hand-held market, Palm, has shipped only about 7 million units. With about 400 million PCs in the world, he said, “the death of the PC is hugely exaggerated.”

But with the PC market fully mature, and many computer components getting more costly, the attention of much of the industry has shifted toward a market analysts say is poised for major growth.

“The mobile wireless Internet opportunity is in its infancy, but it is likely to be massive,” Merrill Lynch analyst Henry Blodget wrote recently to investors. He projected that the number of portable Internet device users would grow from 20 million now to 1.5 billion by 2005.

Compaq spent much of its energy at the show touting its Pocket PC, which recently began shipping and is about the same size as a Palm computer. “This is taking what we know from PCs and expanding it,” said Ted Clark, a vice president at Compaq.

When joined to a wireless modem attachment, the Pocket PC can surf the entire Web, unlike the Palm VII, which is limited to selected portions. The Pocket PC runs a Windows CE operating system that can be clunkier than Palm’s software, but it can sync with Microsoft e-mail and other programs that are already on tens of millions of desktops.

The biggest problem with the Pocket PC, besides the fact that it won’t be sold as a bundle with the wireless modem until August or September, is that the package will cost about $800, or more than some desktops.

In contrast, Palm developer Hawkins was preaching simplicity and low cost.

Hawkins’ latest company, Handspring Inc., uses the Palm operating system in its Visor devices, which can be expanded to add wireless connections and other features. Handspring sold $200 million worth of shares to the public in an initial offering last week. Issued at $20, the stock closed unchanged Tuesday at $24.88 on Nasdaq.

Despite his vested interests to the contrary, Hawkins and several of his competitors predicted that cell phones will proliferate and expand in capability ahead of personal organizers and pagers.

And he said they will do that by developing applications that aren’t as complicated as the celebrated Web-surfing, transaction-oriented models available on other continents.

The most important improvements, Hawkins said, will center on such basics as improved voice transmission and e-mail that doesn’t require laborious key-punching to spell out words.

Stressing simplicity, Hawkins said some phones have “so many menu items, there’s a menu item to reduce the number of menu items.”