Software giant Microsoft Corp. and its partners on April 19 unveiled a new handheld computer that they hope will give market leader Palm Computing Inc. a run for its money.

The Pocket PC, Microsoft’s third try at creating a successful handheld operating system, will feature a much- improved internet browser, easier on-screen reading, a digital voice recorder, and a Windows Media music player.

With additional plug-in hardware, the various models—built by Symbol Technologies, Compaq Computer Corp., Hewlett-Packard Co., and Casio Computer Co.—also will support wireless internet connections and have additional memory storage.

“People joke that it takes Microsoft until version three to get something right,” said Ben Waldman, Microsoft’s vice president in charge of mobile services. “Well, this is version three and we got it right.”

Priced between $499 and $599, the Pocket PCs are at the high end of the market for handhelds that synchronize with personal computers, a concept first introduced by Palm in March 1996. The Palm IIIc, the first Palm organizer to include a color screen, sells for about $449.

“We’re still a little high, but we give a little extra functionality,” said Steve Ballmer, Microsoft’s president and chief executive. Ballmer said he is already using the product for notes, eMail, and a little bit of video golf between meetings. “I feel very good about where we are with this.”

Pocket PC features

That feeling is a first for Microsoft’s handheld efforts. Previous versions of the handhelds, running on the Windows CE operating system, were slow, expensive, and unpopular. The old screens looked like a miniaturized Windows 95 interface, complete with the same icons and “Start” button, and burned through battery power quickly.

On the new Pocket PCs, the interface looks more like Palm’s, complete with larger icons and fewer pull-down menus. Most functions are accessed with a single touch. Battery life has improved somewhat as well.

Even Palm’s premier models don’t feature the perks of the Pocket PC. For example, the only device that offers any kind of music player is Handspring Inc.’s Visor, built on the Palm operating system. The Visor, introduced last November, requires a plug-in module for its music player.

While the Palm IIIc offers a color screen, few other improvements were made to the basic Palm software. The Palm VII, also $449, has a built-in wireless internet connection, but only allows for limited access to a handful of web sites.

Microsoft executives said the biggest plus for the Pocket PC is that it can run a number of programs simultaneously. For example, a user can listen to MP3 music files, play a video game, and look up a phone number at the same time.

A threat to Palm systems?

Palm Computing, recently spun off from 3Com Corp., has no public plans to substantially improve its hardware or software. That could be a serious problem as other hardware companies continue to meld personal organizers with digital music players, pagers, and cellular phones.

“Palm ought to be running scared,” said Michael Gartenberg, a senior analyst with the Gartner Group. “They haven’t shown a clear path to include this kind of functionality.”

Gartenberg noted a similarity to another Microsoft competitor: Apple Computer.

“In the 1980s, Apple was the technology leader for a long time, then just stagnated and let Microsoft beat them,” Gartenberg said. “The same could happen here.”

There are still some technical issues with the Pocket PC. Some Palm customers may have trouble transferring data from older Palm organizers to the new Pocket PCs.

Only one of the three computer makers has included software that allows Pocket PC owners to beam data, via infrared, between the Pocket PC and Palm Computing’s devices. And cheaper versions of the Pocket PC will barely have enough memory storage for all the on-board software.