Monday, March 18, 2002		On Hardware

Palm unveils handheld with colour screens
Franklin Paul

NUMBER 1 handheld device maker Palm Inc. last week unveiled new versions of its pocket-sized devices with colour screens, with Wall Street saying the new models improved on older ones but would not ignite the retail market.

The launch came as Palm battles to grab more of the high-margin corporate market. Palm, of Santa Clara, California, said its m130 priced at $279, and m515 at $399, will hit store shelves today. It also cut the price of some older models.

David Christopher, a senior marketing executive at Palm, said the m130 is "reasonably priced" for a colour-screen model that has the option to add memory and utilise an expansion slot.

The m515 replaces the m505, until now Palm's marquee colour model and boosts available memory to 16 megabytes from 8 MB.

"The m130 will be the lowest priced colour model in the Palm OS market," Christopher said, referring to models using its operating system software. "If they want a competing product, right now they are going to have to spend $100 more to get a colour display."

Device makers say that colour screens will make it more attractive for multimedia uses, such as viewing pictures, playing games and surfing Web sites.

Sony Corp., Compaq Computer Corp., Palm and others have had some success with colour handheld. But consumers have complained that some models are too expensive, the screens are hard to read and the batteries drain quickly.

Barney Dewey, an analyst with research firm Andrew Seybold Group, said Palm's new units are priced attractively, but are primarily a tweaking of existing Palm models.

"The m515 is just an evolutionary change -- it's a better screen and more memory," he said. "The m130 will appeal to the upscale consumer that want a high value product but they want the capabilities of expansion and colour."

Lukewarm reviews for corporate device so far this year, Palm has released three devices, compared with the single new model it unveiled in the latter half of 2001. Palm hopes to rebound from execution and competition troubles that hurt its financial results and stock price.

Palm's i705, introduced in February at $450, is aimed squarely at the corporate market, where travellers need a wireless device to connect to office data, e-mail and scheduling information.

The device got lukewarm reviews from critics, who said it failed to match similar products made by companies like Canada's Research In Motion Ltd. and was less powerful than devices powered by Microsoft Corp.'s PocketPC handheld software.

Palm's challenge is to balance it's craving for the high-margin corporate market with its retail success, selling to one-time buyers of lower-priced units at electronics outlets.

"Palm is trying to move at both ends of the market," Dewey said. "They have taken a lot of criticism for not having their act together on the enterprise end, so they are spending a lot of effort to try to correct their shortcomings."

"But when you look at a big (company) that has a Microsoft rep (representative), a Hewlett-Packard, a Compaq rep, all with offices down the hall from the IT (information technology) manager -- that's a tough one for Palm to deal with," he said.

Palm's Christopher said that many corporate users have already bought their own Palm devices, forcing managers to conform to those standards. Still, Palm's goal is to get in through the "front door," where managers to buy more devices, software and services.

"We have to do a better job of telling that story, and partnering, such that we can sell the entire solution to the enterprise," he said.

Analysts said this year is crucial for handheld makers, who are racing to develop wireless devices for the enterprise market. They must battle mobile phone makers such as Nokia that sell millions more units each year than handheld makers and are adding personal digital assistant features to their phones.

—Reuters