"Microsoft recently announced that it will be evolving the SQL Mobile product into a product named SQL Server Everywhere Edition. SQL Mobile is currently a database that you can use on "mobile" devices, which include Tablet PCs, Pocket PCs, and Smartphones. SQL Mobile differs from SQL Server in that with SQL Mobile, there is no "server" running as a background process. The engine for SQL Mobile consists of a handful of DLLs that you reference from your application. When you want to connect to a database, you just put the path to the database file in your connection string. In fact, working with SQL Mobile feels a lot like working with an Access/Jet database. The limitation for SQL Mobile, today, is that it will only run on "mobile" devices. In other words, you can't deploy an application that uses SQL Mobile to desktops or laptops."
SQL Everywhere is the new and improved version of SQL Mobile. SQL Everywhere enables a truly portable database file that can be moved between the desktop, the laptop, the Tablet PC and the Windows Mobile device. It is as easy to code and deploy as Microsoft Access. Scott Swigart has written an introductory article about SQL Everywhere on MSDN that can help you in getting started.
If you are interested in this, you might want to check out SQLite instead. Instead of being a database with caveats for each platform, it works exactly the same on every platform (mobile, MS Desktop, *nix, MacOS, everything). It is not as full featured as MSSQL, but I would say it covers 90% of what most people expect to do with a database on a phone.
Prepare for SQL Server Everywhere Edition
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