Microsoft CE Overshadows Palm

The shift could also be the result of PalmSource's marketing change. As the PDA field grows more crowded, the company is putting more of its attention on smartphones. PalmSource is "almost abdicating its leadership in the PDA market to focus on the smartphone market," says one Gartner analyst.

Will Palm rebound in the fourth quarter, when consumers go holiday shopping? We wouldn't bet the farm on it. When Microsoft wants a market, it usually gets it. Just ask Sony, whose PlayStation sales are running neck-and-neck with that of Microsoft's Xbox.