(FORTUNE Magazine) – Perhaps it's not your idea of a dream vacation, but handheld digital gadgets are making it easier to keep up on your work as you climb a mountain in Colorado or stroll the Nantucket shoreline. Today's palmtop computers and organizers are getting lighter and more powerful, with speedier microprocessors than those in some desktop machines. At the same time, there's an array of new wireless gadgets, based on pager and digital-cellular-phone technology, that you can use to receive stock alerts, send electronic mail, or even consult the appointment book you left back in the office. Which of these mini-marvels you choose depends on how much you want to spend, how much you want to carry, and, most importantly, how much you need to do. In a sense, these are the most personal of computers, and before selecting one you should think carefully about how you intend to use it.

Some of these devices are so inexpensive they become impulse buys, and many people give them as gifts. But they're not always the foolproof consumer appliances they may first seem to be, particularly if you are trying to use one as a companion to your desktop PC. A good approach is talking to a friend who owns one. After he has finished showing off all the nifty features, ask what he really does with it, day in and day out. How much time was invested in learning to use the machine? Is its operation easy to remember?

BEYOND ROLODEX

If you want a top-of-the-line gadget and expect to do more than keep track of appointments, telephone numbers, and expenses, then you should consider palmtop computers, which are beginning to live up to their advance billing. Until recently, choosing a handheld--from Sharp Electronics, Hewlett-Packard, Psion, and others--did not involve making an operating-system decision. Just as in the early days of the personal computer business, every manufacturer had its own proprietary system. Then along came Microsoft with Windows CE, a highly compact version of the familiar desktop operating system. Microsoft wanted the experience of using a handheld PC to be just like working with a desktop PC or a notebook.

Now a familiar script is playing out in the marketplace. Microsoft signed up major computer makers and consumer electronics giants, such as Compaq, Hewlett-Packard, NEC, and Philips. These companies licensed the technology and brought out handheld PCs based on Windows CE 1.0, the first version of the operating system. Initially, Sharp and Psion, two longtime players in the market, decided not to join the CE group. Nor did 3Com, which commands the largest market share with its shirt-pocket-sized PalmPilot. Psion and 3Com remain holdouts, but Sharp now has jumped on the Microsoft bandwagon. It has just introduced a new CE product, the Sharp Mobilon, even though it continues to sell its popular Zaurus organizer, which has its own operating system.

The early Windows CE-based handhelds opened to mixed reviews and sluggish sales. As with many first-generation products, they had some things right, but others didn't work as well as planned. HP provided a roomy screen on its first CE handheld, Philips an internal modem, and both came through with relatively comfortable keypads. Based on most market surveys, these two machines are consumer favorites. But some vendors' models experienced data-loss problems, and many units had trouble synchronizing with a desktop PC.

With the second version of Windows CE, Microsoft and its hardware partners are trying to fix these shortcomings, while adding features that bring these little machines closer to being laptops in their own right. The biggest innovation: color screens, which are much easier to read and should be a strong selling point.

The newest handhelds also incorporate features that proved popular on the first machines, such as larger screens, more main memory, and faster processors. And CE now comes with a program for displaying PowerPoint slides, a plus for those road-show presentations.

Despite improvements, there are drawbacks. Screens and keyboards are tiny. Some products let you enter information by writing on the screens with a stylus, but this can be an awkward process, good only for the brief note. Even on machines designed to decipher handwriting, recognition requires some training--on your part, not the machine's. You'll probably have to learn to write more clearly.

In addition, handhelds may be sophisticated digital systems with much of a desktop's power, but they also have the same potential for frustration. Windows CE works like the desktop version of Windows, which is handy, but only if you already know Windows. The new version of CE is also easier to use, but it needs to be even easier.

Choosing a handheld is much like buying a laptop. If PowerPoint is an application you expect to use often, color is obviously important. Monochrome is okay if your highest priorities are E-mail and fax. Next, decide what options you want and determine whether these are standard or cost extra. Is the modem included or does it come as an add-in PC Card sold separately? What is the battery life? Is an AC adapter included in the price or do you have to buy it separately? Is the docking cradle extra? What kind of opening is in the case for expansion cards, and how many such cards will it accommodate?

One factor that limits these machines is their tiny storage capacity relative to desktops and notebooks. Many CE handhelds offer the option of so-called flash memory cards, which are like miniature disk drives. However, these cards currently max out at about 4MB, which means you can't store a vast quantity of document files.

There are some ways around this problem. For example, Iomega, the maker of sporty desktop storage products such as the Zip and Jaz drives, is developing a new technology that will increase mobile storage for handheld computers. Its "n-hand" technology squeezes up to 40MB of storage on a credit-card sized device. The technology is expected to be incorporated in handheld computers next year, and owners of today's handhelds will be able to buy the devices, using them as external storage drives.

GRAFFITI

Not everyone, of course, needs or wants such complex handhelds. That's why a much simpler format, the PalmPilot, from 3Com, holds a commanding 51% of the worldwide handheld market. It doesn't try to squeeze in the features of a desktop computer. Instead, it's a portable complement to a PC. Rather than battery life measured in hours, the Pilot runs for months on two AAA batteries. It has no keyboard or handwriting-recognition capability. There's just a small on-screen keyboard, or you can use the accompanying stylus to write on the screen with a special alphabet called Graffiti, which is easy to learn.

Software for the Pilot includes a datebook, address book, to-do list, memo pad, and expense recorder. The PalmPilot Professional, which has a street price of about $399, has E-mail and Internet communications features built in. Independent companies have also developed software for the Pilot, and IBM recently adopted Pilot technology as the basis for its new WorkPad, which suggests that many specialized applications will be developed in the future.

Another very simple appliance is the Avigo, a new organizer from Texas Instruments. Like the Pilot, it is small and light enough to fit in a shirt pocket, and provides only the most essential applications, including a datebook, address book, notepad, and a small database program.

Perhaps the most interesting feature of the Avigo is a unique on-screen keyboard layout, designed by a small company called Tegic Communications in Seattle, that uses special software. As you begin typing a word, the software will, in many cases, finish it for you. Like the Pilot, the Avigo has a simplified set of buttons on the front panel of the device, which makes it easy to get to the screen for "to do" items, notes, addresses, or your calendar.

If you prefer a handheld that relies on handwriting recognition, consider Apple Computer's MessagePad, based on the Newton operating system. The MessagePad's handwriting-recognition capabilities have greatly been improved over earlier versions, and the design provides a simple-to-understand environment. Apple's newest version, the MessagePad 2100, has more memory, speedier performance, and improved communications features. You can now communicate with Macs and PCs on a network, for example.

GET WIRED

For most consumers, size, weight, and software are important considerations when it comes to choosing a handheld, but how easily you can link and share information with personal computers and other devices will probably be the most significant criteria. Most handhelds offer desktop connections to a PC or Mac, and many also provide modem options.

Beyond those basic features, the mix of software and hardware capabilities can be dauntingly complex. The Pilot, the first to provide easy connectivity with desktop computers, will allow you to dial up your PC or Mac via modem, but you cannot send or receive E-mail from the device itself; you must first send the messages to your desktop and then relay them on from there. Independent software developers are moving to remedy that. PilotMail, an Internet E-mail service from Ft. Lauderdale, Fla.-based Satelnet Communications, will enable users to send and receive messages on the Pilot over modem links. Meanwhile, Microsoft is beefing up the communications capabilities of Windows CE handhelds. The latest models can connect to your desktop PC via a modem.

Bear in mind that none of the information-sharing features on any of these devices work seamlessly. There are various incompatibilities, and some features of the calendar programs, for example, will not translate between desktop and handheld.

A much different strategy for sharing information is to use wireless services. Wynd Communications, for example, provides a wireless E-mail package, for $29.95 a month, that includes a modem and an E-mail address you can use with either a handheld or your laptop. As part of this service, you can have Wynd send you stock quotes regularly throughout the day. And Wynd can download Web pages for off-line consumption, which might save you some surfing.

For those who don't want to bother with handheld computers or even simple electronic organizers, there are other options. Wireless phone services being rolled out across the country will let you receive short text messages, stock quotes, and E-mail on your phone's display.

If you do most of your work by phone, you should first look for those with good voice quality, and then see which of these phones have data capabilities as well. (See Smart Talk in this issue.)

In addition to providing nationwide voice service, the PocketNet phone from AT&T Wireless contains a special type of wireless modem that can connect you to Websites. You can also set up a calendar and address book that can then be viewed on the phone's display. Such advanced wireless services are just beginning to appear. Many of today's digital cellular or Personal Communications Services won't gain E-mail capabilities until next year.

PAGE ME

However, pagers still provide perhaps the easiest and most immediate form of data notification. Alphanumeric pagers, which display both text messages and phone numbers, can be purchased for less than $100. With a little help from your Internet service provider, MIS staff, or a third party such as Wynd Communications, you can have your E-mail forwarded to your pager.

Pagers are becoming more complex as well. Traditional pagers can only receive broadcasts; they cannot transmit any information back to the network. The SkyWord Plus service from SkyTel, however, offers a Motorola pager that will tell the network when you are out of range, so that messages can be held and rebroadcast to you later. Another service from SkyTel offers the Access Link pager from Wireless Access, which will enable you to compose and send replies or original messages. Like the Motorola pager, the Access Link can let the network know when you're out of range, so you won't miss a page.

You should also consider services available along with basic messaging. PageNet is offering voice messaging in a few markets today and plans to go nationwide next year. The pager actually stores short voice messages that you can play back without picking up a phone. On the other hand, if what you really need is timely delivery of a few specific pieces of information, look no further than your existing paging service: Telescan is one of several third parties that will send stock alerts within minutes of a trade based on parameters you set for movement in the stock.

Selecting a mobile device will get even more complicated in 1998 as new competitors enter the wireless data market and as Windows CE mutates to a wider variety of devices. Microsoft's licensees are expected to roll out shirt-pocket-sized versions of CE next spring that are intended to compete with the Pilot. There will also be new handhelds that combine the functions of palmtops and wireless devices, including phone and computer hybrids. Of course, as these gadgets get more powerful and more versatile, they will vie with laptops for your attention and your checkbook.