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Philips cans Velo, bows out of WinCE

Bound to flee to Symbian - but will it be welcome?

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Philips is dumping Windows CE along with its Nino handheld because of poor sales and tough competition from Palm. Philips says the market was smaller than expected, but that's a question of market definition. Palm sales are healthy enough, so perhaps it's the CE market that is too small and highly competitive at that, what with Casio, HP and Compaq panting away. The truth seems to be that the market for Windows CE handhelds is pretty colourless, even after the introduction of colour. Palm of course recently responded with its own colour announcement. A Philips spokeswoman told The Register it sees the market going quickly towards the integration of handhelds and mobile phones, and that an announcement of a WAP device is imminent. Now could it be that Philips is changing its status from being a drinking member of the Symbian club to a fully paid-up member? We suspect so, but Philips is not confirming this yet. The company might however have a problem getting in at a shareholder level. Symbian now professes itself happy with its current global clutch of stakeholders, it's got three in Europe already, so the door may well be closed. Philips mobile phone group is now running the show, with the expectation that the company will be focussing more on voice products and small cell phones. Although reports of the death of CE would be premature, it is looking in poor health. Palm's decision to license its operating system to competitors may well prove to have been an intelligent idea, and avoid the problem that Apple faced earlier in its development. Microsoft's reaction was pretty low key, with mutterings about brand or channel strategy. The clam-shell Velo, another CE handheld first shown in prototype at Comdex in 1996, was very quickly sent on its bike. One model, the 8MB Velo, was only sold online in the US, with Philips saying it "couldn't be more pleased with the success of the Velo Store". A more likely tale was that Philips found the US retail market very tough. Philips is collaborating with Microsoft with a set-top box for WebTV, and TV-Pak software, but is also involved with AOL's AOL TV project. The unusually quick decision by Philips to snuff-out Velo would appear to be one of the results of the company's desire to increase profitability by reaching a target return on net assets of 24 per cent. There has been increasing pressure for the group to be split up, which the company resists by claiming that the brand name brings added value to the group. Of course there is no real reason why the company could not be split into mini-Philips with separate accounting, especially as until recently it broke down its revenue by division. ®

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