Palm unveils mid-level PDA

Franklin Paul

NEW YORK: Palm Inc. on Thursday unveiled a new mid-range model of its popular

handheld computer, packing in greater features and software perks in hopes of

invigorating a market punished by competitive pricing, oversupply and consumer

malaise.

At about $250, Palm's new m125 personal digital assistant, or PDA, will sit

between its high-end m500 line, aimed at choosy professionals, and the

entry-level m100, targeted to cost-conscious consumers.

Santa Clara, California-based Palm says it designed the model to appeal to

first-time customers, by keeping the cost relatively low, while building into

the handheld appealing features such as an expansion slot that eases the

addition of extra memory and applications.

"These (consumers) are people that are very sensitive to brand and

price, and they have been waiting for that right kind of mixture of feature and

functionality before they purchase," said John Cooke, Palm's senior

director of product management.

Price sensitivity is a prickly matter in the handheld arena, a relatively

young market crowded with models from an army of powerful players, such as Sony

Corp., and Compaq Computer Corp. Models range from as low as $100 to well over

$500, despite offering similar essential functions - namely an address book and

schedule planner.

Devices in the market is split into two camps: those powered by Palm OS,

Palm's operating system software, and models that use Microsoft Corp. software.

Palm OS dominates the global market with a 63 percent share, but Microsoft has

been gaining rapidly, and Pocket PC appeals to a more high-end buyer, which

yields greater profit margins.

Kevin Burden, analyst for International Data Corp. said that m125 may help

Palm solidify its grip on the middle market, by essentially upgrading current

models with new features and bundling it with software that it hopes with make

the device more valuable to consumers.

"Palm is bolstering the mid-range of this market which has been it best

selling price band," he said. "The middle space is awfully crowded,

but when you look at Palm-based devices, its the middle price point that seem to

deliver the most revenues."

HANDHELD MARKET ALRADY CROWDED

The model comes with a 8 megabytes of memory, a Secure Digital expansion

slot, and several software programs that, for example, allow users to view and

edit Microsoft Word documents and Excel spreadsheet, popular applications used

in most corporate offices.

The news comes ahead of the crucial holiday buying season, and as the market

gets even more congested. Earlier this week, Handspring Inc., the No. 2 PDA

maker unveiled two new handheld computers, including one, the Visor Pro, that

boasts double the memory of most of the devices made by its rivals.

In addition, Palm must deal with its own litter of models, with names such as

Vx and IIIc, which still linger on some store shelves due to a sudden slowdown

in demand for the devices that occurred earlier this year.

Palm's Cooke said the m125 launches a strategy by the company to shrink its

line to 3 tiers, although he admits that older models will not soon disappear

from retail.

"We've been told, 'you've got too many models out there,' so we are

trying to simplify the buying proposition," he said. "So that's what

we have been working on for the last few months."

Shares of Palm on Wednesday tumbled to its lowest levels since it went public

in march 2000, amid a general slump in the overall market. Palm tumbled to

$2.21, but recovered to close at $2.51, up 10 cents, or about 4 percent.

(C) Reuters Limited 2001.