June 7, 2001 1:05 PM PDT

Handspring offers rebate on newest device

In another sign that the PC price war is filtering down to handheld computers, Handspring on Thursday announced a new rebate program on its latest model.

As earlier reported, consumers will receive a $100 rebate on the $399 Visor Edge, the sleek, high-powered model Handspring introduced in March, with a trade-in of almost any PDA (personal digital assistant) from Handspring or any of its competitors.

The offer comes after a series of recent price-cutting moves by competitor Palm, which has been plagued by excess inventory. The PDA leader trimmed the price of its wireless Palm VIIx model by a third last month and offered steep discounts to its huge developer community. Retailers have also taken matters into their own hands, cutting prices on the latest Palm models.

Handspring has been more reserved about price cutting, offering small discounts and rebates and some freebies to keep pace with Palm.

The new rebate, which goes into effect Friday and runs through July 1, is aimed at getting customers with older Visor and other PDA models to trade up. But a spokesman also acknowledged the Palm factor.

"Obviously we're not immune to competitive pressure," said Handspring spokesman Brian Jaquet.

The trade-in offer covers all Palm OS, Windows CE, Psion and Pocket PC-based PDAs, along with models from Sharp, Casio and others. Even Apple Computer's relatively ancient Newton qualifies. "We're not being too picky," Jaquet said. Trade-ins will be sent to a San Jose, Calif., recycling center that specializes in high-tech goods.

Visor Edge buyers can also qualify for the rebate if they pass along an older Visor model to a family member or friend.

The rebate will be offered for sales through Handspring's Web site, which will also have details on the promotion, and through Handspring's booth at the PC Expo trade show, which runs June 26-28 in New York.

Handspring is believed to have been relatively unaffected by the tech slowdown, partly because it didn't lock itself into the component contracts that helped swell Palm's inventory. In the company's most recent quarter, Handspring CEO Donna Dubinsky said it would take appropriate steps to deal with "soft" sales demand, including cutting back on hiring and other cost-cutting measures.

Gartner analyst Todd Kort said its inevitable that Handspring will feel some sting from Palm's inventory woes.

"With Palm having so much inventory, it needs to lower prices and offer rebates," he said. "And it's incumbent on Handspring to respond in some way. Neither company wants to engage in some kind of price war. But to maintain the cash flow, they have to make these kind of offers."

Kort said he expects further promotions over the next few months, as Palm prepares to introduce new models in the fall.

"You're likely to see a lot of interesting marketing moves by Palm and Handspring for the rest of the summer," he said.

"Palm is trying to figure out creative ways to unload that excess inventory without seriously impacting future sales. They might try something to seed the market, like targeting college freshman or high school seniors--people who might not normally buy a PDA but would consider it if you offered a really attractive price on an older model."

 

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