How Microsoft Could Lose Its Grip on 'Rugged' Devices When a UPS delivery worker shows up at your house, the bulky handheld that he yanks out for you to write your digital signature is known as a "rugged device." Microsoft's older Windows Mobile operating system is running on the vast majority of these devices, but competitors are offering rugged alternatives on newer software, and it's questionable how long Microsoft can fend them off. Rugged devices are designed to tolerate the abuse of being outdoors on a regular basis. They're often sealed to prevent rain, moisture and dust from getting inside, and their cases are sturdy enough to survive falls. Workers in field services like telecom, utilities, oil and gas typically carry these devices. You've seen them in the hands of delivery workers, and you may have seen some healthcare providers carrying rugged handhelds for viewing patient records and vital signs. For several years, Microsoft has dominated the rugged-device niche. The company got a head start on mobile software when it released Windows CE, its pocket PC operating system, in 1996, when mobile computers were mostly affordable to only big businesses. For over a decade, Microsoft has formed relationships with major enterprises who have deployed their business software on Windows Mobile devices. But the Windows Mobile software hasn't received a significant update since 2010. And Microsoft is focusing investments on its new Windows Phone 7 software, a smartphone operating system tailored for consumers, which is not compatible with the older Windows Mobile apps. Furthermore, Microsoft has said it is not ready to announce its plans for business customers for Windows Phone 7. This leaves an opening for competitors to come up with alternatives. Manufacturers of rugged devices "have used Windows Mobile for over a decade, but Microsoft seems to be abandoning that platform more or less, leaving firms like Motorola, Intermec, Panasonic and Toshiba to turn to Android to stay relevant for customers," said Nick McQuire, research director of enterprise mobility strategies at the International Data Corporation. Pete Cunningham, a principal analyst at Canalys, said that Microsoft historically has worked well with big enterprises, but that the break in compatibility between Windows Mobile and Windows Phone 7 could concern big businesses who use Windows Mobile apps to do work. After all, companies invest a significant amount of money on rugged devices for employees, and if the system software seems outdated, these businesses may struggle to stay relevant in the next few years. "The long-term support for the platform for these devices is a really big consideration for companies that deploy these devices," Mr. Cunningham said. The rugged handheld industry is relatively tiny compared with the smartphone market, which makes it an easy target for a competitor. It ships roughly two million devices each year, a number expected to grow to 2.7 million worldwide in 2014, said Mr. McQuire from I.D.C. Some companies are already seeking to offer alternatives to the dated Windows Mobile software. Last year, Samsung released the Galaxy xCover, a rugged smartphone running Android. Also, plenty of accessory makers have made rugged cases to protect iPads in field work, while software companies have made apps to help run businesses.