August 4, 2000 9:40 AM PDT

Palm's up with two new products

Palm is hoping to gain the upper hand in the escalating race to stay ahead of its rivals.

On Monday, Palm is expected to launch two new products intended to keep ahead of start-up Handspring. As first reported by CNET News.com, Palm is expected to release the M100 and a new version of the Palm VII, according to sources close to the company.

The M100 will feature a redesigned case with changeable face plates in fashion colors, in a marketing plan borrowed from cell phone maker Nokia, sources said. The entry-level device is expected to be priced at $149 and to replace the low-end Palm IIIe, which is out of stock at many online retailers.

The M100 appears to be aimed squarely at Handspring's Visor, a low-priced device that has been steadily gaining market share against Palm in the past few months. The Visor, based on the Palm operating system, also comes in colors, although it does not offer changeable cases.

The Palm VII is anticipated to offer additional content partners and more memory than the previous versions. The M100 is expected to be aimed primarily at the education market, which Palm has identified as a potential growth area.

On Monday, Palm also is expected to unveil the Palm Vx Limited Edition, a special version of the Palm Vx available only through the Palm.com online store. The updated Palm V will come in two colors, according to an email sent to Palm customers, "millennium blue," and "champagne," and feature 8 MB of memory. The device will be priced at $399 and will be available in limited numbers.

Palm representatives would not comment on the new products.

The company has announced plans to throw a party for employees Monday to celebrate the launch of the new product lines and the announcement that this year's revenues will top $1 billion. The "Billion-dollar bash/Fall product launch" party will take place at Palm headquarters in Santa Clara, Calif.

The two devices are the first products from the company since the release of its Palm IIIc device in February, which debuted to underwhelming reviews and lackluster sales.

PalmVxLimited In the months following, Palm sales have suffered because of supply issues. Short supplies of in-demand components like displays and flash memory have made it difficult for Palm to keep popular products like the Palm V and Palm IIIxe on store shelves. Many retailers have been back-ordered on those products for months.

Palm is not the only company suffering from product shortages. Compaq Computer's iPaq Pocket PC has been hard to find since its introduction in June, mostly because Compaq did not anticipate the demand for the product.

Palm licensee Handspring has capitalized on the shortages, gaining market share as one of the only devices to be fully stocked among retailers. PC Data reports that Handspring had the best-selling product in June and accounted for 25 percent of all handhelds sold at retail.

The colorful M100 appears targeted at blunting Handspring's momentum, although the start-up's CEO promises that it has more tricks up its sleeve. "We never expected that color cases was a sustainable, long-term competitive edge," said company founder Donna Dubinsky earlier this month, alluding to upcoming products featuring wireless Internet access.

There is a certain level of irony in Handspring's present good fortune. Handspring initially sold its Visor only through its own Web site, a decision that resulted in product delays and customer-service complaints while the young company grappled with overwhelming demand and e-commerce software glitches.

Palm this week announced the Claudia Schiffer version of its Palm Vx device. The supermodel will sell her own version of the Palm device through her Web site, the company said this week.

 

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