Palm Inc. to give a reading on the future

But competitors -- most notably, Microsoft's PocketPC -- are moving in.

"Palm will have to give a view of their future and that they'll once again be trendy," said Rob Enderle, an analyst with Giga Information Group. "They have a large number of suppliers and they'll have to keep them from migrating to Microsoft."

In fact, the Redmond, Wash.-based Microsoft Corp. will hold a separate invitation-only dinner Tuesday for developers who will be in Santa Clara attending this week's three-day PalmSource 2000 conference.

"Palm certainly has a lot of users, and there are applications that their users can't live without. We're interested in talking to those people who are building those applications," said Ed Suwanjindar, product manager for the mobile devices division at Microsoft.

According to IDC, Palm handhelds, and others using its operating system, are estimated to surpass 4.4 million units in 2000, carrying 74 percent of the worldwide market. The Windows CE operating system by Microsoft will reach 1 million units, or 18 percent of the market.

IDC projects, however, that Palm's operating system dominance will diminish to 51 percent by the end of 2004, while Microsoft's operating platform will grow to 39 percent of the handheld market.

Palm officials appear unfazed by the competition.

"It's nice that folks are acknowledging us as the leader in handhelds," Michael Mace, Palm's chief competitive officer, said of Microsoft's efforts to get developers to build applications for the PocketPC platform.

Mace also downplayed the forecasts of a diminished market share.

"In the last three years, third-party analysts have said that Palm was about to decline in the next year," Mace said. "Instead, Palm has grown tremendously and we think that's going to continue next year."

Palm has made strides this year to stay competitive. It expanded its wireless Internet download options and announced plans to introduce wireless e-mail next year. At this week's conference, Palm is expected to give a demonstration of its next generation of handhelds that will include Bluetooth's short-range radio technology.

Palm also plans next year to introduce color screen options -- in an apparent effort to compete against Handspring's color cases and screens. It will show off its soon-to-be released Palm Vx Claudia Schiffer Edition, which sports a blue brushed-metal case instead of the silver ones now offered.

Palm early next year also will introduce expansion slot options, similar to those offered now by Handspring. And in a move some analysts say is crucial for Palm and its partners to keep up with its competitors, Motorola Inc. announced Monday that it will start incorporating ARM technology. <