Palm Moves Toward Wireless, Away From PDAsPalm Moves Toward Wireless, Away From PDAs

Facing a mounting challenge from vendors whose handheld devices use Microsoft's Pocket PC platform, Palm Inc. on Monday defended its market-leading position with new products, strategies, and partnerships that will place the company's emphasis more on providing wireless communication devices and less on PDAs. To do this, Palm introduced two handhelds in its Tungsten line -- one with greater processing power and the other with a built-in keyboard and antenna for wireless communications.

Palm's Tungsten T, available now for $499, is aimed at mobile professionals. It features a 320-by-320 color display, integrated Bluetooth wireless communication compatibility, voice recording capabilities, Palm OS 5, and Texas Instruments' OMAP1510 processor. The Texas Instruments processor gives the Tungsten T the processing power to run applications that feature video clips, digital audio files, and interactive games. It also includes 14 Mbytes of storage.

Palm's Tungsten W, which won't be available until the first quarter of next year, is the company's first handheld to include both a color display screen and a built-in keyboard. With wireless services from AT&T Wireless, SingTel, or Vodaphone, the Tungsten W can be used like a wireless phone to access E-mail, SMS messaging, business apps, and Palm personal information management software. The Tungsten W will run on Palm OS 4.1.1 and a Motorola Dragonball VZ 33-MHz processor and feature a Class 10 GSM general packet radio service antenna.

All of this technology means Palm will provide a "relevant platform for business professionals to continuously access information," says Andre Dahan, president of AT&T Wireless Mobile Multimedia Services.

The Tungsten devices put Palm in a better position to compete with Pocket PC devices from an applications perspective, says Phillip Redman, a research director with Gartner. "It's a tough marketplace to be in because people want a one-device offering" that does voice and data, he says, adding that users will always need a phone, so it's the data device that has to conform.

Palm continues to dominate the United States and worldwide markets for PDAs, with twice the market share of its closest competitors: Hewlett-Packard and Sony. Palm captured 31% of the worldwide and 40% of the U.S. PDA market during the third quarter of 2002, according to a Gartner Dataquest study released Monday. But while Palm's market share growth lingers in the single digits, Sony grew 380% in the United States and 280% worldwide. HP grew 27% in the United States and 20% worldwide. Gartner Dataquest predicts that more-competitive pricing from Pocket PC vendors and the entrance of Dell and Toshiba into the PDA market will provide additional challenges for Palm.