[13] Microsoft licensed it to original equipment manufacturers (OEMs), who could modify and create their own user interfaces and experiences, with Windows Embedded Compact providing the technical foundation to do so.

The first version – known during development under the code name "Pegasus" – featured a Windows-like GUI and a number of Microsoft's popular apps, all trimmed down for smaller storage, memory, and speed of the palmtops of the day.

Windows CE even powered select games for the Sega Dreamcast and was the operating system of the Gizmondo handheld.

A distinctive feature of Windows CE compared to other Microsoft operating systems is that large parts of it are offered in source code form.

However, a number of core components that do not need adaptation to specific hardware environments (other than the CPU family) are still distributed in binary only form.

According to Microsoft, "CE" is not an explicit acronym for anything, although it implies a number of notions that Windows developers had in mind, such as "compact", "connectable", "compatible", "companion" and "efficient".

Windows CE was originally announced by Microsoft at the Computer Dealers' Exhibition (COMDEX) in 1996 and was demonstrated on stage by Bill Gates and John McGill.

Microsoft released the Windows CE 1.0 Power Toys that included a cascading menu icon that appeared in the system tray.

Also bundled were several other utilities, most notable were a sound applet for the system tray, enabling the user to quickly mute or unmute their device or adjust the volume and a 'pocket' version of Paint.

Microsoft learned its lessons from consumer feedback of Windows CE 1.0 and made many improvements to the operating system.

Instead manufacturers released upgrade ROMs that users had to physically install in their devices, after removing the previous version.

[26] Microsoft Visual Studio 2012, 2013, and 2015 support apps and Platform Builder development for Windows Embedded Compact 2013.

Later, the Windows CE header files were translated for use with Lazarus, a rapid application development (RAD) software package based on Free Pascal.

[28] This programming tool is used for building the platform (BSP + Kernel), device drivers (shared source or custom made) and also the apps.

One can also use Platform Builder to export a software development kit (SDK) for the target microprocessor (SuperH, x86, MIPS, ARM etc.)

[30] CodeGear Delphi Prism – runs in Visual Studio, also supports the .NET Compact Framework and thus can be used to develop mobile apps.

It employs the Oxygene compiler created by RemObjects Software, which targets .NET, the .NET Compact Framework, and Mono.

It allows the construction of macros and simple GUI apps developed by systems analyst Jonathan Maxian Timkang.

The rules for manufacturing a Pocket PC device are stricter than those for producing a custom Windows CE-based platform.

The defining characteristics of the Pocket PC are the touchscreen as the primary human interface device and its extremely portable size.