August 2, 2002 1:01 PM PDT

Hiptop handheld still on hold

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Those waiting to get their hands on Danger's Hiptop will have to wait just a little bit longer.

The combination of cell phone and Web-browsing handheld, which the company had hoped to have in the hands of consumers by the beginning of this month, is unlikely to be widely available until next month, industry sources say.

The first U.S. carrier is expected to be T-Mobile (formerly known as VoiceStream), which has completed trials of the device. The company recently posted a picture and details of the device on its Web site, noting that it was "coming soon."

Industry sources say T-mobile's initial plan for the device, which it is calling the Sidekick, is expected to include unlimited Web browsing and a small number of cell phone minutes for $40 a month. Danger has said it designed the Hiptop to sell for $200.

Danger CEO Andy Rubin declined to offer a new launch date, saying that is up to the company's carrier partners. However, he said the company is in volume production of the device, with 6,000 Hiptops being produced each week.

Danger has pushed out its launch date a few times amid delays from carriers in firing up their next-generation networks and other issues. Analysts say that when it does arrive, the device could have a notable impact on the rest of the handheld market.

The unit itself has a screen that flips up to reveal a keyboard. A light-up "scroll wheel" provides navigation among programs such as the Web browser, e-mail and address book. Hiptop owners can set customized lights and ring tones for particular callers.

Although wireless devices aimed at the consumer have been a tough sell, Danger's combination of AOL Instant Messenger, a digital camera, Web browser and the ability to work as a cell phone could make the device a hit, said Brian Blair, an analyst at hedge fund firm Bluewater Capital.

"There is a huge market opportunity to tap into younger people, maybe between ages 12 to 25, that use AIM on a regular basis," Blair said. "If this device can deliver that at a low cost, which it looks like it's able to, it's going to be a home run."

One of the risks for the company is that it is relying on wireless carriers to market and sell the devices.

"The trick will be if carriers back it with enough marketing to help it take off," said John M. Jordan, a principal in the office of chief technologist at Cap Gemni Ernst & Young.

Getting the word out will be key, Jordan said.

"Branding to the masses is something that very few tech companies have been successful at, and Danger will have little control in that area...that's one of the major risks that they run into," Jordan said. "If their carriers don't support them in the marketing sense, that could be an issue."

Blair said he was hooked, based on a brief trial of a preproduction unit.

"It was the first device I have played with since the Blackberry that I have felt that addiction," he said. "I couldn't put it down."

Initially, BlackBerry maker Research In Motion should not feel much of a threat from Danger, given that the former sells primarily to business users and the latter is pitched at consumers. However, Blair said, RIM may suffer from the impression that more companies are doing keyboard-based devices well.

The device's arrival could pose problems for Palm, which gets much of its business from consumers, he said.

"For Palm, this further shows their lack of innovation," Blair said. "They have yet to develop their own voice product."

Palm has said it will offer a handheld later this year that can make phone calls using an earpiece.

As for the Hiptop, Blair said his biggest concern is whether the voice quality will be good enough to persuade people to use the device as their cell phone.

News.com's Richard Shim contributed to this report.

 

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