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Palm unveils new business models

Palm Inc introduced new business- and consumer-oriented handheld PCs, seeking to spark flagging demand for the pocket-sized gadgets.

business Updated: Apr 24, 2003 11:18 IST

Palm Inc on Wednesday introduced new business- and consumer-oriented handheld computers, seeking to spark flagging demand for the pocket-sized gadgets.

Palm, the dominant maker of both personal digital assistants, or PDAs, and the software that powers them, introduced Zire 71, a consumer product with a build-in camera, music player and a personal information manager.

It also unveiled Tungsten C, a high-end model with built-in high-speed wireless connectivity -- also know as Wi-Fi -- enabling users to gain wireless access to the Internet, email, and messaging, and other corporate data while traveling.

The debuts come as industry figures show that sales of handhelds, a must-have item only two year ago -- cooled significantly in the first quarter from a year ago.

According to International Data Corp (IDC), the worldwide handheld device market declined 21 per cent from a year ago to 2.45 million units, due to sluggish demand.

Handheld makers such as Sony Corp, Toshiba Corp, Hewlett-Packard Co and Handspring Inc, have been hard pressed to add new consumers to the more than 20 million PDA owners, or to convince current users to replace the models they have. Buyers, faced with a tough economy, have balked at the pricey gadgets.

But Todd Bradley, chief executive of Palm Solutions, Palm's hardware unit, said the introduction last year of the low-end Zire and upscale Tungsten lines has revitalised sales of handhelds. Indeed, he said more than 800,000 Zires were sold, lured in part by the $99 price.

"Our focus is on returning Palm to profitability, and doing it on very innovative products," he told Reuters.

Tungsten C and Zire 71
The Zire 71, available today, will sell for about $300. It features a high-resolution screen, a sliding chassis which reveals the camera lens, and a rechargeable battery.

"They have put out a product that will be a hit among a decent-sized audience," said IDC analyst Alex Slawsby. "They finally have gotten to the mode where they don't simply pull themselves up the level of the competition."

He suggested, however, that the model may cannibalize sales of Tungsten T, Palm's high-end compact device -- with some similar features -- introduced late last year. Palm has already said sales of Tungsten T have lagged expectations, despite generally positive reviews.

"I believe there are going to be people who if they decide to upgrade, would move away from that Tungsten T and buy the Zire," he said. "But I guess as long as consumers are buying Palm (-branded models), the company is happy."

Tungsten C boasts 64 megabytes of memory and a speedy 400 Megahertz processor, and hits stores on May 5 at a price of about $500.

Analysts said the market for Tungsten C is still a niche, but may be popular within that group, which can use the device to wirelessly manage applications typically handled on a laptop computer.

Previous attempts to persuade corporate managers to buy Palm's high-end models, such as the i705, also failed. But rivals have suffered similar fates. Research In Motion Ltd. has gained a positive reputation due to users' loyalty to its BlackBerry device, but to date it has sold fewer than 1 million units.

First Published: Apr 24, 2003 11:16 IST