Handspring grabs No. 2 sales spot

Following its favorable debut on the stock market this week, Handspring got more good news today: Its Visor was the second-best-selling handheld two months in a row this spring.

Just a few months after its entry into stores, Handspring accounted for 25 percent of all retail sales of personal digital assistants (PDA) in May, according to a new report from NPD Intelect. Handspring followed market leader Palm, which continued to dominate the market with 67 percent of sales.

In April, the report said, Handspring grasped 18 percent of sales, compared with Palm's 71.7 percent.

That trend indicates the Visor is gaining momentum in the PDA market, which is itself growing steadily, according to Sima Vasa, an analyst with NPD Intelect. Vasa noted that the Visor is priced $200 below competing devices from Hewlett-Packard or Compaq Computer.

"Handspring is doing an amazing job in terms of product and competitive differentiation," she said. "They held and captivated an audience."

Handspring, started by Palm co-founders Donna Dubinsky and Jeff Hawkins two years ago, markets a device based on the Palm operating system but with the addition of a "Springboard" expansion slot that allows add-ons such as extra memory and a global positioning system (GPS) receiver.

The company raised $200 million in an initial public offering at $20 a share this week. After jumping 40 percent in their first day of trading yesterday, shares were down to around $25 today.

Palm has led the device market, garnering up to 80 percent market share. But the company faces more competition than ever in its core business, not just from Microsoft and PDA makers but from Web-enabled cell phones and other Internet appliances. The company has said it wants to expand its focus to wireless devices by the end of the year.

Handheld makers using non-Palm operating systems did not fare as well in April or the second quarter, despite the high-profile launch of Microsoft's Pocket PC in April. Casio shipped the top-selling Microsoft device and took a little over 5 percent of the market, followed by HP and Compaq, which hasn't yet released its Pocket PC device.

"A lot of it has to do with the value proposition," Vasa said. "For HP and Compaq, it's not their core business. Handspring and (Palm) have focused on this market."

The Visor was in stores for only part of the first quarter and is missing from the top five sellers for the entire quarter. Palm jumped to 87 percent market share, followed by Casio, with 8.5 percent, and Compaq, with 1.7 percent. Royal and HP each had less than 1 percent market share.

Handspring benefited from the price of the Visor, which costs around $200, compared with the $500 price range of the HP, Compaq and Casio devices.