Much of a CIO’s attention this year has been split between new technologies and running a more efficient shop with fewer resources and a smaller budget.

But CIOs and key technical decision makers have told me that the current focus on the enterprise and back-office systems will likely give way to a new impetus next year: connectivity devices outside the enterprise.

Although consumer devices (i.e., anything other than a PC) have had limited success as “terminals” in the enterprise as yet, an impending collision of today’s high-speed home access, faster processors in consumer devices, and new paradigms for archiving and retrieving digital information requires that CIOs consider end users’ location as “anywhere but the office” in the next few months.

In this article, we’ll discuss two of the three top battles involving the “connected consumer” that will play out next year, and why corporate IT planners need to pay close attention. For each battle, we’ll examine key issues, connectivity strategy, target markets, and how all these factors will impact the planning horizon.

Palm vs. Microsoft (Windows CE)
No matter what you believe about the ultimate outcome of this battle, you have to admire Palm for how they’ve dominated the PDA space. While other vendors have come and gone, and Microsoft keeps improving with each release, Palm has been a consistent source of innovation.

They’ve “out-Microsofted” Microsoft by winning the hearts of significantly more developers for Palm than for Windows CE, and they’ve “out-Appled” Apple in the higher-education space by providing a product and a program that is beginning to make Palm the preferred on-campus PDA. Palm’s hope is that this momentum carries them into the corporate world.

But Palm has an Achilles heel that Microsoft hopes to exploit. What Palm did very well, for several years, is provide the right mix of built-in functionality and programmability at a great price. Microsoft, on the other hand, has always followed the same pattern—develop software providing functionality that companies will ultimately want as soon as the hardware catches up.

Pocket PC 2002 is also Microsoft’s third major release of the Windows CE platform (which, as we all know, means that they’ve finally got it right). In fact, technical decision makers now recognize that Microsoft has passed Palm in its ability to deliver enterprise functionality at a reasonable price point. The question now is whether Palm will survive long enough to complete multiyear project rollouts.

Given Microsoft’s focus on the enterprise, its connectivity focus in the near term will be on high-speed 802.11 or Bluetooth connectivity. Yes, they have the scaled-down Stinger phone device that uses a subset of CE, but it’s a poor substitute for a high-powered Palm or full Windows CE device. Palm, on the other hand, is positioned well (based on their experience working with Kyocera and QualComm to make Palm phones, and their work with the wireless Palm VII) to take advantage of 2G and 2.5G networks when they are broadly released next year.

And here’s where it gets interesting. Palm first has to recognize that Microsoft can and will outspend and outresearch them to win the enterprise space. Palm still needs to make investments in this space, but ultimate survival will be based on its ability to penetrate the consumer and home-office markets.

Palm has several pluses on its side: It has a better entry-level price ($150 for the Palm vs. $500 for the Pocket PC), more consumer software, better low- to midspeed wireless strategy, and a commanding lead in the installed base.

The bottom line? If I were a corporate IT planner, I’d focus on the Palm as the endpoint device being used by consumers using or purchasing my products and services. The Pocket PC is the device that I’d use to build out the internal infrastructure, where low-power, highly portable but well-connected devices are required.

TiVo vs. Microsoft (UltimateTV)
At first glance, this battle appears the least likely to impact corporate planners. Why in the world would a corporate IT leader care what device ends up recording broadcast TV shows in a user’s home?

Given that limited context, the answer is “They wouldn’t.” But ask the question a different way, based on the next generation of devices arriving in 2002, and you’ll get a different answer. Should a corporate IT planner care about who wins the battle to control the standards for the key repository of all electronic media in the home? The answer is a resounding “yes.”

Here’s how the battle has been waged up until now. TiVo has investors from the cable and broadcast industry with a vested interest in making sure that personal video recorders (PVRs) don’t destroy advertisers’ revenue streams by making it easy for viewers to bypass commercials. They also want to participate in the future video-on-demand market by having access to a secure, local staging device (like a PVR).

Microsoft, on the other hand, views the battlefield for customers much differently. To Microsoft, UltimateTV (its consumer PVR platform) and Microsoft TV (its technology for cable boxes and consumer electronics with built-in PVR capability) are simply early versions of a home media server. Today, that means video that is streamed and captured from their key partner (DIRECTV in the case of UltimateTV, and cable channels or any video source for the Microsoft TV partners).

But here’s where the vendor visions diverge. While TiVo and its broadcast partners search for value-added opportunities, Microsoft is already pre-announcing plans for their next versions of home media server products. Future Microsoft devices will be able to record, stream, share, and protect any kind of media using Windows Media Player as the core technology. Microsoft home media servers will let users consolidate and manage TV shows, prerecorded movies (using rights-management software), home movies, pictures, music, and any other media types. With access like DSL (isn’t it funny that DIRECTV bought Telocity, a major DSL player?) and cable modems (and, isn’t it funny that Microsoft has invested heavily in cable outfits that have high-speed cable-modem plants?), home users will be able to access media from anywhere outside the home or share media with family, friends, or neighbors.

This obviously opens the door for companies to provide value-added services like training to both employees and customers. Companies could also use these devices as hubs for other services like instant messaging, video conferencing, or shopping. Once these devices and their high-speed connections are ubiquitous, the need for long-distance companies disappears. Is it any wonder that AT&T has made such large investments in cable and other high-speed Internet technologies?

The bottom line: If I were a corporate IT planner, I’d be looking now for ways to use the capabilities of these home media servers for future communication, training, and direct sales opportunities.

In my next column, we’ll look at the third major battle and how the tides running in these unique battles could create a huge backlash effect on how corporations develop future applications.

What’s your enterprise’s state of readiness for connectivity devices?

Share your plans and give us your feedback on Tim Landgrave’s predicted battles for the connected consumer by sending us an e-mail.