Now Microsoft is shifting its strategy. In its new $3 million-plus ad campaign, the software concern is abandoning its "Can your Palm do that?" tagline and purging its ads of all references to Palm. Instead, Microsoft's mobile-devices division is moving to stand on its own with a series of ads that highlight Pocket PC devices being used in different wireless scenarios, such as sending a wireless e-mail.

"It's time now for the Pocket PC to establish itself on its own," says Mr Phil Holden, marketing director of Microsoft's mobile-devices division. "Our 'Can your Palm do that?' campaign suggested that the Pocket PC and Palms were similar. Now we're going to stand on what the Pocket PC can do and not what the Palms can't do."

According to market research firm NPD Intelect, Port Washington, NY, Palm's devices had a 72.1 per cent marketshare in 2000. Devices from Handspring, which are based on the Palm operating system, had a 13.9 per cent share. Meanwhile, devices based on Microsoft's Pocket PC platform, including Compaq's iPaq and Hewlett-Packard's Jornada, had a slightly more than 10 per cent share of the $1.03 billion US hand-held device market.

Microsoft's new ad message doesn't mean that its continuing battle with Palm, Santa Clara, California, is any less intense. Since Palm introduced its first device based on its operating system, in 1996, Microsoft has been struggling to sell a competing hand-held operating system, initially called Windows CE. While its latest effort-the Pocket PC platform-has won better reviews, Palm remains dominant.

It was Microsoft's coming-from-behind position that spurred its "Can your Palm do that?" ad campaign, which, for the most part, attracted unfavourable notices. "No major brand has succeeded by solely playing off the competition," says Mr Tim Maleeny, director of strategic development at ad agency Publicis & Hal Riney, a unit of Publicis. "Microsoft's campaign reinforced the notion that they were late to the game."

Palm executives weren't amused either. Microsoft's early campaign was "very unbecoming of somebody that powerful," says Mr Satjiv Chahil, Palm's chief marketing officer. He retaliated with a $500 million world-wide advertising effort several months ago that doesn't mention the Pocket PC. In its latest incarnation, Palm's advertising will focus on its wireless Palm VII device, spotlighting its wireless e-mail and wireless Internet capabilities. Palm's refreshed campaign will hit print publications, radio airwaves and the Internet in mid-February, Mr Chahil says.

Meanwhile, Microsoft's new ad campaign, developed by Seattle agency Wes Design, will feature black-and-white shots of three smiling Pocket PC users. In front of each smiling face is a colour shot of a Pocket PC device - along with its colour screen - and the new tagline "Go wireless." Text in one of the ads spotlighting wireless e-mail reads, "No one needs to know you're out of the office." Another ad focusing on wireless Internet surfing reads, "Change where you work, not how you work."

Microsoft's ads also will highlight some of the new partnerships it has struck with wireless-content and access providers, such as OmniSky and GoAmerica. "Sign up for OmniSky service, and you can access the Internet in rich colour when you're on the go," reads one of the ads.

Microsoft's Mr Holden says the ads initially will appear in national daily newspapers, such as The Wall Street Journal and USA Today, as well as in more than a dozen technology-oriented magazines, such as PC Magazine and Business 2.0. The campaign is expected to run for the next four to five months. Microsoft also will revamp its Pocket PC Website. "It'll be interesting to see what Palm thinks of this new ad campaign," says Mr Holden, in a parting shot. "One of my favourite hobbies is to bait them."