October 1, 2003 5:18 AM PDT

Palm pitches three new handhelds

Palm on Wednesday introduced three new handhelds, in an effort to expand its audience while pleasing its loyal and enthusiastic crowd.

But analysts said bleak back-to-school sales numbers may indicate a not-so-happy holiday season.

As previously reported, the Milpitas, Calif.-based hardware division of Palm was preparing to debut two Tungsten devices, the T3 and E, aimed at business buyers; and the Zire 21, a replacement for the company's consumer hit from last year, the $99 original Zire.

Each of the devices will use ARM-based processors and version 5.2.1 of the Palm operating system, allowing them to perform advanced capabilities beyond those of their predecessors.

The $399 Tungsten T3 comes with an Intel 400MHz XScale chip for handhelds, 64MB of memory, Bluetooth connectivity, a color screen with a resolution of 320 pixels by 480 pixels, and portrait and landscape views on the display.

The $199 Tungsten E and $99 Zire 21 use Texas Instruments' 126MHz OMAP311 ARM processors, but the E comes with 32MB of memory and a color screen with a resolution of 320 pixels by 320 pixels; the Zire 21 comes with 8MB of memory and a monochrome display, but no backlight.

The Tungsten T3 and the E come with an expansion slot that is compatible with Secure Digital and MultiMediaCard cards. The Tungsten E has a thin, sleek case and includes a built-in digital audio player.

Click here to Play

Anthony Armenta, product manager, Palm
The Tungsten E and Zire 21 are significant updates to two of the company's most popular products, the Palm V and the original Zire. Palm, with the launch of those devices, is hoping to draw new customers as well as entice previous customers to upgrade.

"The E is a logical upgrade for Palm V users," said Anthony Armenta, senior product line manager for the Palm Solutions Group.

Palm gets a significant amount of business from previous handheld customers who upgrade, but those numbers have been dwindling as loyal buyers have accused the company of not improving its handhelds fast enough, according to analysts. Recently, however, that cry has been muffled as Palm has released devices, such as the Zire 71 and the Zire, which have proved to be very popular with consumers.

"Upgrades have played a very significant role in (Palm's) success," said IDC analyst Kevin Burden. "Expanding beyond this audience will be crucial, and they've done that so far with the Zire line, but they have to continue."

Armenta said 74 percent of the buyers of the original Zire were first-time buyers.

Holidays cheerless?
However, indications from the back-to-school sales season may mean rough holidays, according to retail market tracker NPD Techworld analyst Stephen Baker. The holidays are often the best sales period for manufacturers.

Sales of handhelds were down 30 percent in the month of August compared with last year, according to Baker.

"The reality right now is that it looks like it will be a tough holiday season for handhelds," said Baker, "sales were not good during the back-to-school time."

However, this trio of devices is among the company's most inexpensive round of prices for new handhelds.

Armenta said the $199 Tungsten E is a sort of entry-level device aimed at business users and is meant to grow that audience. The company is also cutting the price of its Tungsten T2 device to $329 from $399.

"The E caters to the Palm V crowd, which for the most part has not upgraded, but this lower price with a color screen might get them to move over," said Burden.

Click here to Play

Anthony Armenta, product manager, Palm

The two Tungsten devices come with personal information management application enhancements, which include new agenda views, improved scheduling, additional fields for contact information and synchronization of these enhancements with Microsoft Outlook. The enhancements were developed by the hardware division and will be solely for its use.

In related news, the company said Tuesday that it had set Oct. 28 for a stockholder meeting to vote on the PalmSource spinoff and Handspring acquisition.

 

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