July 22, 2002 1:30 PM PDT

Sony launches entry-level handheld

Sony is the latest device maker to make an aggressive push into the entry-level market for handhelds.

The consumer electronics maker announced Monday that, beginning in August, it will sell the new Clie PEG-SL10 for $150. The timing of the product launch is meant to coincide with the back-to-school buying season, which, afer the holidays, is traditionally the second most lucrative period for retailers. This year, however, analysts are expecting students to hit the books instead of the stores.


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Sony CLIE PEG-SL10 info

Device manufacturers have lowered prices and started promotions to attract consumers. Handheld market share leader Palm has said that it aims to push prices lower and kicked off a two-for-one promotion in early June. Handspring and Sony have cut the prices on their devices recently, which is reminiscent of a price war that broke out between the major handheld makers last year.

According to a report from Bear Stearns analyst Andy Neff, handheld sales during the week of July 6 fell to their lowest point since September 2001. Neff added that he expected muted sales to continue through the summer, which is traditionally a slow period for sales. Palm maintained its market share lead with 45 percent of the market, while Sony held at the No. 2 spot with 21 percent of the market. Handspring was in the No. 3 position with 20 percent of the market.

Kevin Burden, an analyst with research firm IDC, said that Sony's new device is clearly a move into the heart of the handheld market. The low-end market, where devices sell for less than $200, makes up the biggest part of the market.

"Sony is trying to get into the volume share of the market where margins tend to be very slim," Burden said. "The only reason to do this is to build market share."

That share will likely come from Palm, which holds the No. 1 spot in the low-end market, Burden said. Burden added that he expected Sony to do some damage to Palm's share with the SL10, which at $150 has a higher screen resolution that Palm's similarly configured $199 m125 device.

Sony spokesman David Yang said that the entry-level market has always been part of Sony's handheld strategy.

"Sony isn't shifting its focus away from the mid- to high-end range," Yang said. "We are equally committed to the entry level as the mid- and high-end."

The $150 SL10 runs version 4.1 of the Palm OS and has a monochrome screen resolution of 320 pixels by 320 pixels. The device also comes with 8MB of internal memory, a Jog Dial navigation button, and a Memory Stick expansion slot.

In late June, Sony dropped the price of its Clie T615C from $400 to $300 and cut the price of its Clie S360 from $200 to $180. The Clie T615C comes with a color screen and remote-control technology that lets consumers use the device to change settings on their DVD players, televisions and VCRs. The Clie S360 comes with a black and white display and 16MB of memory.

 

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