June 16, 1999 5:00 AM PDT

Franklin's Rex handheld sputtering

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Franklin's Rex handheld device debuted with a bang but may be going out with a whimper.

The credit-card size personal digital assistance debuted two years ago to acclaim by users intrigued by the miniature size of the device. But two years and more than two million PalmPilot unit shipments later, Rex seems to have faded from prominence, unable to live up to its own hype.

Franklin, well known for its line of schedule organizers, introduced the Rex in 1997 as a joint venture with Starfish and Citizen. At the time, the device was revolutionary, both for its miniature size and shape and its low price of $150.

However, since then, Microsoft has made a big push into the handheld space with devices based on its Windows CE operating system, and Palm Computing has continued to solidify its dominance, releasing several new devices. As a result, Rex has been squeezed out, analysts say. A version of the device was priced at $50 at a Costco store near San Francisco.

But it's not just pressure from competition. Analysts say the device has not taken off for several reasons.

The small size of the Rex, though convenient, hamstrung the company in terms of the number of features it could offer, observers say. Early versions did not allow any direct input through the device at all; users could only update data through a desktop interface.

"Their form factor was compelling, but there were severe limitations," said Jill House, who tracks handhelds for research firm International Data Corporation. "In the first generation, you couldn't change anything except through the desktop, and that's an onerous prospect."

In addition, the small size of the Rex resulted in a display that was difficult to read, noted Gerry Purdy, editor of industry newsletter Mobile Insights. "It was hard to read," he said. "People over 40 had trouble reading the screen."

Those who follow the handheld market say the future may not be bright for the Rex: By 2003, 92 percent of handhelds sold will be based on either Windows CE or the Palm OS, according to IDC.

"It's still selling, but sales are going down this year," said Stephen Baker, of PC Data, which tracks retail sales of technology products. The newer models are continuing to sell "in the range of a Windows CE product," he said.

Modest sales
Franklin, based in Burlington, New Jersey, did not return calls for comment. In May, Franklin warned it expects a loss for the fiscal year, due in part to lower sales of its electronic products.

Franklin will probably continue to sell modest numbers of the Rex, because of what Purdy calls the "gee-whiz factor," especially because market research firm Dataquest projects handheld shipments of 5.7 million in 1999, an increase of 47 percent over the previous year. But the device will probably never make much headway against established handheld manufacturers, House said.

But Rex may provide a stepping stone, analysts said. Vestiges of the Rex will probably be seen in other devices in the future, House said. "It pointed the direction that people saw things going," she said. "As a concept piece, it went over quite well."

In fact, Purdy expects to see variations of the Rex in devices such as cell phones in the near future, especially since Motorola has purchased Starfish. "I don't know what they are going to do for an encore," he said.

 

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