Microsoft's Pocket PC handheld operating system will be more successful than previous versions of Windows CE, but still not as dominant as Windows on the desktop, according to analysts.

The operating system will have a 30 per cent market share for personal digital assistants (PDAs) and smartphones by the end of next year, according to analyst Gartner.

On 19 April vendors including Hewlett Packard, Compaq, Casio and Symbol will launch devices using the operating system.

Windows CE has not been as successful as expected. It has lost market share to rival Palm, and manufacturers such as Philips, IBM and LG Electronics have withdrawn some CE products.

Gartner analyst Ken Dulaney said: "Although it will gain in market share, CE will not be dominant in the handheld market like Windows is in the desktop market.

"Microsoft was beaten up by Palm and has clearly shown a lack of vision in this space. For two years I recommended users not to buy CE. Microsoft had taken Windows, shrunk it down and expected it to be wonderful, but it is too complicated.

"But Microsoft went back, swallowed hard and made it better. The new version will be better and make it a more important player."

Dulaney said that one of the advantages of Pocket PC is that it can be used as a business tool as well as for relaxation. The operating system includes an MP3 player as well as a cut-down version of Microsoft Office.

"People want a PDA for work, but they also want to listen to music at the airport - with the new version of CE you can do both," he said.

Dulaney added that Microsoft would have more success with CE in the embedded market. "By the end of 2001, it will have a 50 per cent share of this market."

He said CE would become a supported operating system in 90 per cent of companies by 2004, but that the use of handheld devices will push up the total cost of ownership for organisations by 10 per cent by 2005.