Handspring cuts prices, preps new device

On its Web site Friday, Handspring chopped the price of its low-end Visor Neo and Platinum handhelds by $20, to $149. The slim but largely ignored Visor Edge dropped another $30 to $169, while the 16MB Visor Pro dropped to $199. The cuts put all of Handspring's Visor devices at less than $200.

With the cuts, the Mountain View, Calif.-based company could improve its popularity among price-conscious buyers. Market share leader Palm has been dominant at the low end of the market.

Handspring is also expected later this month to debut the $300 Treo 90, a device similar in appearance to its Treo 180 combination cell phone and handheld, but without the wireless modem, according to sources. The Treo 90 will have a color screen, version 4.0 of the Palm operating system and 16MB of memory.

It also will be the first Handspring device to include a Secure Digital expansion slot as opposed to the proprietary Springboard slot that has been a hallmark of Handspring's Visor line. By moving to the postage-stamp-size Secure Digital slot, Handspring can tap into an industry standard already used by rival Palm as well as in digital cameras and digital music players.

Handspring's products have started to pile up at retailers and distributors, according to a report by securities firm UBS Warburg earlier this month. Handspring's U.S. retail inventory level had grown to 14.5 weeks as of April 1, up from 11.3 weeks a month earlier and 9.6 weeks' worth a year ago.

In addition to losing ground to Palm, Handspring has been losing market share to consumer-electronics giant Sony and its Clie line of devices. Sony took over the No. 2 position from Handspring in market share for the month of March, the first time that has happened since Sony entered the market. Palm maintains the top spot, with 54.3 percent of the retail market, followed by Sony, with 15.4 percent, and Handspring, with 14.5 percent, according to NPDTechworld. The research firm tracks shipment numbers from manufacturers to retail stores.

"Sony is really climbing because they are targeting this space," said Stephen Baker, an analyst with NPDTechworld. Baker added that the top-selling devices in the handheld market are Palm's m515 and m130, both of which cost more than $200.

Handspring's price cuts come at the start of the "dads and grads" season, a key selling time for handhelds, as people shop for Father's Day and graduation gifts.

Analyst Brian Blair, of New York-based hedge fund Bluewater Capital, said the Treo 90's biggest selling point could be its keyboard.

"I think there is a huge market (made up) of Palm OS devotees who would buy a product because it has a built-in keyboard," Blair said. "That's one thing no Palm has had. BlackBerry has had a keyboard for how long?"

Representatives for Handspring were not immediately available for comment on the impending launch of the Treo 90. However, CEO Donna Dubinsky promised on an April conference call with analysts that Handspring would launch an organizer that would fit into its communicator strategy but was not itself a wireless device.

The news followed disappointing sales numbers for the Treo 180: While 47,000 Treo units shipped to retailers and distributors in the most recent quarter, only 13,000 of those were purchased by consumers, Handspring said.

The company has launched a promotion that gives consumers $100 off a Treo 180 when they trade in an older handheld from any major maker. In addition, the company plans to release a color version of the existing Treo, as well as another color version that runs on the CDMA (code division multiple access) wireless network.

Handspring has been losing market share in the handheld market since announcing earlier this year its intent to eventually exit the market for non-wireless devices.

"Handspring needs to remain a significant player in the handheld market," Baker said. "It will be awhile before the combination device becomes a significant product category."

News.com's Ian Fried contributed to this report.