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Acer to release PDAs with "snap-on" cell phones

Taking a cue from Handspring, Acer will come out with a line of personal digital assistants complemented by attachable cell phones and other peripherals.

TAIPEI, Taiwan--Taking a cue from Handspring, Acer this summer will come out with a line of personal digital assistants (PDAs) complemented by attachable cell phones and other peripherals.

In August, the company will release its Slim Mate PDA, a Palm V look-alike that will let customers snap on peripherals such as a digital camera or a global positioning system unit, said Tony Tsai, an Internet solutions manager at the company. The peripherals will follow in October.

By next year, the company will debut a cell phone unit that attaches to the back panel of the PDA. A pager function may follow later, he added.

The snap-on strategy follows in the footsteps of Handspring, which has emerged as one of the more prominent competitors to Palm. The company's Visor PDAs are priced lower than competing products from Palm or Microsoft. Handspring's plan is to drive incremental profits from the peripherals.

The entry of Acer may also indicate that the market for handhelds and PDAs in the U.S. and Asia is about to be commoditized by Asian manufacturers, according to David Thor, research director of ResearchPortal.com. Thor said Asian equipment makers typically wait for American companies to innovate and then enter mature markets with cheaper products. This may be bad news for Handspring and Palm, which both recently entered the Asian markets, and may be unable to compete on price with Asian companies.

"Asian companies always make them there first and then sell them cheaply over here," Thor said. "They can commoditize what we do at much lower prices."

As far as style goes, Acer is sticking to the standard Palm archetype. In its design, the Slim Mate is nearly identical to the Palm III. It comes with the same aluminum brushed case and features a screen that is roughly the same. The control buttons and the stylus slot are also similar.

The peripherals feature the same metallic look and are roughly the same size as the PDA itself.

Palm has been credited with influencing portable device design, and many of the most recent handhelds released from competitors using Microsoft's operating system have borrowed from Palm's design team. Palm has typically focused on slim packages and brushed metal cases.

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By contrast, Handspring's PDAs come in translucent plastic cases, which cuts costs, and are slightly larger than Palm devices. The peripherals for Handspring's device also attach to the top of the handheld, not on the back.

In another similarity to Palm, the Slim Mate will use a Motorola Dragonball processor, the same used by Palm and Handspring, Tsai said. A second generation of handhelds that will emerge in 2001 will use a StrongArm processor, he added.

Palm has also said it will move to the StrongArm processor, which is more powerful and allows for more multitasking on the device. Because it licenses Palm's operating system, Handspring will likely follow in its footsteps and also adopt the chip.

The Slim Mate will run a proprietary operating system being produced by Acer and an unidentified third party, said Tsai. Although this limits the number of third-party applications, the company is working with several Palm developers to jump-start the market.

"Palm has 10,000 applications," Tsai said. "Usually, you don't use 10,000 applications. We will be in the market with 30 or 40."

Analysts say Acer may be hamstrung by its choice of operating system.

"For any platform to succeed, it needs applications. If you look at the community of people who build applications, it's generally small organizations," said Ken Dulaney, an analyst with Gartner Group, explaining that these small companies will probably not choose to write applications for Acer's handheld, if the company chooses an OS other than the Palm OS, Microsoft's Windows CE, or Symbian's OS.

However, the company has a strong track record as a supplier, Dulaney said, which will serve it well in the Asian markets. "They're a major supplier and can do whatever they want. The question is going to come down to how it is designed, what does it look like."

The Slim Mate will sell for around $300, while the attachable camera will retail for approximately $200. It will be marketed primarily to the Asian market, Tsai added.