Several players are trying to pump new life into the Windows CE handheld market, even as other companies retreat in the face of increasing competition from Palm. On Monday, Compaq Computer announced a pair of new Palm-size devices based on Microsoft's Windows CE operating system. Compaq's new 0.5 inch thick Aero 1530 model offers a 16-color grayscale display for a $299 price tag. The company also introduced the colour Aero 2180, which offers 24MB of memory and is priced at $449. While Compaq is forging ahead with its Windows CE offerings, the platform is loosing momentum in the retail market. Several key Windows CE device makers, including Everex and Philips, are pulling back, industry observers say. Philips, for example, has disbanded its mobile computing group, absorbing it back into the rest of the company. Devices such as Vadem's Clio, seen as an innovative Handheld PC professional design, have been slow to sell. The company is rumoured to be working on adapting the product to become a regular Windows notebook PC. Analysts say that Palm handhelds are outselling Windows CE devices by almost a two-to-one ratio. With Handspring's introduction of $149 Palm operating system-based Visor last week, the outlook became even more bleak for Windows CE devices. Handspring brings with its competing devices, which offer many of the same features, such as contact management and email support, as a Palm-size PC, but for about half the price. So what gives? In the market for Palm-size devices where less is more, would the Windows CE devices be more popular if they were cheaper? One company, Mainbrace, thinks it has the answer to that question. This week the company will launch FastTrack, a Windows CE product platform that includes a hardware design service that it says will help companies lower development costs and bring products to market more quickly. Mainbrace's first FastTrack design will target the vertical market. The company, however, has Palm-size PC and tablet PC designs in the works as well. It also provides finished product design. The company was founded in 1997 by a cadre of former Hitachi, Philips and Nortel executives. Mainbrace's first product, called Data Collection Terminal, will offer a base design, including hardware and system-level software, for a handheld data collection device that companies license and build. End users would employ the device for measuring inventory, recording medical patient data or tracking point of sale data for vertical industries. The device, optimised for long battery life, will utilise a monochrome 320 by 240 pixel touch screen, an ARM 720T RISC processor, 16MB of memory and a built-in modem. Where Windows CE is flailing in the retail market, the platform is gaining strength in the vertical space, with vendors Symbol Technologies, Telxon and Intermec all building data collection devices around it. Symbol also utilises Palm OS. Microsoft (Nasdaq:MSFT) calls Mainbrace a "very solid partner." "What they are doing is a lot of grunt work, so a device maker would not need to do it... and could bring (a device) to market faster" said Trip Chowdry, a Windows CE product manager. The approach of doing the grunt work could pay off, according to executives familiar with the market. Vertical device makers "view the natural evolution of DOS and Windows 95-based handhelds to Windows CE," said Tom Hunt, vice president of marketing at Puma Technologies Puma develops synchronisation software for Palm OS and Windows CE devices. For now, Mainbrace is targeting the vertical market, where Wong says a number of device makers are looking at the best way to enter with a handheld using Windows CE. One way to do so, is to outsource the majority of the development to a company such as Mainbrace. "I think, in the embedded market, there is a benefit (to the approach)," said Matthew Nordan, an analyst with Forrester Research, in Cambridge, Mass. "The question is if you're a systems integrator building a device, say for a company like Hertz, how much of the device do you want to build on your own?" But Mainbrace sees a need. "There's a bunch of companies out there that are beginning to move from embedded DOS, up the food chain, to Windows CE," said Tom Wong, President of Mainbrace. Since there are no industry-wide design guides for Windows CE companies either have to go it alone or partner with a firm such as Mainbrace. In the case of Mainbrace, a customer looking to develop a data collection device using Windows CE can "take my technology, add a bar code scanner, wrap plastic around it and sell the device for less than $1000", he said. Mainbrace will provide the hardware design and system-level software as well as a software development kit to its licensees. One of its designs starts at around $250,000. While that sounds like a lot of money, companies developing Windows CE devices from the ground up, have spend tens of millions of dollars, before bringing a product to market, Wong said. Mainbrace also provides licensees with a software development kit supporting Visual Basic and Visual C++ programming languages for use in writing custom applications for the device. With most of the design work done for them, vendors will be able to bring devices to market more quickly and for less cost, Wong said. "We're aiming this to move the market pricing down a notch," he said. While targeting the vertical market at first, Mainbrace has plans for a number of other designs, including Palm-size PC and tablet PC devices using Windows CE. The company has a device design in the works that should help vendors take aim at lower-cost devices like the Handspring Visor. "We have a customer in Taiwan making a Palm-size PC. The next Generation Palm six PC with this technology in Q1 next year," Wong said. "My customer will go to market at under $200." The next generation Palm-size PC's major innovation will be a new, more simplified user interface, code-named Rapier. Rapier is designed with features, such as single tap navigation, which will help users find data more quickly. The interface will also include an Internet Explorer Web browser, according to sources familiar with Microsoft's plans. The devices themselves will see some small hardware improvements, such as the addition of clearer screens. Mainbrace's data tablet design will include a 10.4-inch screen and 150MHz RISC processors, among other things. With the competition in the handheld market increasing, will Mainbrace face challenges from Palm computing devices? Or is there room for everyone in the market, as Palm Computing contents. "Windows CE is not about palm computing. The CE market could be double that in two years because of the terminal, the Internet computer. CE is about Internet connection. It's not about Palm. You need a good browser and the only companies in the world that can do that are Microsoft and Netscape (Communications)," he said.