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WinCE is the operating system that runs on Pocket PCs and other small/embedded devices (like auto radios, TV set-top boxes, video game systems, etc.) Pocket PC is a hardware specification and a set of applications that form a minimum configuration for a handheld device to carry that name, and part of that specification is running WinCE (a newer version, of course, than in the original handheld devices).
The confusion comes from the fact that WinCE, in its early days, only ran on handheld devices and so the name became synonymous with those devices. Then Microsoft broadened the range of hardware and environments in which WinCE was deployed and thus needed additional terminology for the handheld units: Handheld PC (HPC), HPC Pro, Palm-sized PC (PsPC), and Pocket PC.
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