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Editor's note: This column is part of a two-day series on handheld devices, running May 6 and May 7. An overview details



SAN FRANCISCO -- When it comes to the business of handheld computing,


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is playing the unfamiliar role of leader.

At the


trade show three years ago,


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trumpeted the release of Windows CE, a portable platform of its powerful PC operating system. The Redmond, Wash.-based Microsoft lined up PC makers such as





as partners.

But consumers turned instead to 3Com's sleek, simple


organizer, commercially introduced in April 1996, that offers easy access to friends' phone numbers or directions to a favorite bar. It has changed life for the digerati in the Valley, thanks to four years of work by Jeff Hawkins and Donna Dubinsky, creators of 3Com's

Palm Computing

subsidiary. The Santa Clara, Calif.-based networker has sold three million Palm units as of February. But with Microsoft as a rival, 3Com can never rest.

"I wake up every night screaming" about Microsoft and other competitors, says Mark Bercow, a vice president in 3Com's Palm division.

So far 3Com has kept a step ahead by adding extras such as increased memory and infrared data-swapping features.

"They're just stomping on Microsoft," says analyst Michael Erbschloe with market researcher

Computer Economics

, and he expects upgraded versions of the Palm V and Palm VII, which include wireless capability, to maintain the edge. Add to that crafty new applications such as a smart cell phone by


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that incorporates Palm technology, an item which is due to be shipped next month.

No wonder by 2003 Computer Economics expects 3Com to ship 8.4 million units and still command 60% of the total market for handheld computing despite growing competitors. Computer Economics says 3Com currently claims 54% of the the overall market for handheld computing. Research firm

International Data Corp.

estimates that in 1998 3Com operating systems claimed 79% of the market for palm-sized devices that work with computers -- a more narrow field -- which includes IBM's portable offerings. In 1999, IDC says, 3Com's share will shrink to 64%.

But it will not be easy. Palm inventors Dubinsky and Hawkins left in early 1998 to start


, a rather tight-lipped venture that has licensed the Palm for unstated consumer applications. In their place, 3Com has brought in



veteran Robin Abrams as well as other developers to defend its lead against Microsoft.

3Com has also recruited manufacturers to develop new Palm applications; new products include


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databases for professionals who need to access information while away from the office, and units that interact with


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Lotus Notes

on a PC. And in February 3Com spent $17.5 million cash acquiring

Smartcode Technologie

, a French software developer that will help to set up a phone system that carries Internet traffic.

Computer Economics' Erbschloe says companies like Oracle and IBM have the added benefit of supporting a rival to their nemesis Microsoft -- especially since in this field, Microsoft still hasn't won a critical mass of exclusive partners. But keeping partners away from Microsoft in the future will be tough for 3Com.

Qualcomm, for example, has selected 3Com for its smart phone but intends to test Windows CE software for future versions. This could be the next hot gadget, combining cell phone features with palmtop organizing and Internet surfing capabilities.

In the meantime, 3Com is keeping its fingers crossed for the success of the Palm VII model -- which ships commercially this summer -- with its wireless news feed and emailing capability.

Microsoft, naturally, is stepping up as well. Its software will be embedded in Web-enabled phones built by electronics firms such as






, which demonstrated prototypes at a trade show in March and aim to ship commercial units early next year.

Some say however, that a fight to the death isn't a foregone conclusion. Unlike the PC business, the handheld market doesn't necessarily give rise to a monopoly, says IDC analyst Diana Hwang, because they tend to appeal to different customer tastes. 3Com takes a streamlined approach to features and functions. Microsoft is piling them on. Says Hwang, "There really is room for two operating systems."