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Commentary: "Convergence" devices still down the road

Recent alliances between handheld manufacturers and major players in the cell phone market signal the nascent nature of hybrid devices.

Recent alliances among handheld manufacturers and major players in the cell phone market signal the beginning of a convergence between the personal digital assistant (PDA) and the cell phone.

These plans eventually will result in a single device, probably about the size of today's Palm III, which combines and integrates the functionality of a PDA, a cell phone and a pager.

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As the market for a converged handheld device starts to form, carrier service providers will begin offering integrated services, which, of course, will foster growth in the converged-device market.

However, this convergence may take two years or more to gain a real presence in the marketplace, despite Handspring's VisorPhone announcement this week. Motorola has said that it will not release its combined device (in partnership with Palm) until Global System for Mobile Communications cell phone service becomes widely available. We estimate that that will take 18 months to two years in the United States, although it will happen sooner in Europe and parts of Asia.

The scope of the convergence is limited to handheld devices. We expect people to continue to use multiple portable devices for accessing the Internet and back-end services. These devices include laptops or some sort of laptop derivative, combinations of cell phones and PDAs, and possibly electronic tablets.

We do, however, believe that over time cell phones will become "smarter," with more PDA-like functionality. Within two years a single device will evolve that meets the needs of most people for an advanced cell phone, PDA and pager, with integrated services. This device will allow people to keep track of their schedules, to-do lists and address books; to get pages and emails; and to take notes and create emails either by writing on the screen or using an attachable keyboard, much as they can on today's Palm.

They will be able to tap a phone number in the address book to dial it on the cell phone (possibly even employ low-end voice recognition technology) and use the same cellular connection for wireless email and limited connections to the Internet and corporate data, much as they can today with the Palm VII.

To accommodate a PDA-sized screen, the converged devices will be larger than the leading cell phones, a drawback. However, they will be less expensive and more compact than the combination of separate PDAs and cell phones that people carry today. Corporate buyers in particular will see compelling advantages to the combination in manageability and the ability to deliver wireless services to workers, both in and outside the office.

The problem that the carriers and other companies have in delivering services to these devices is that today there is no standard, agreed-on form factor. Services have to be designed differently for Wireless Application Protocol phones with tiny screens than for PDAs with larger screens and greater functionality. Once a single form factor is agreed on, the carriers and other companies will start providing services that will help drive the market for these devices.

The weak point in this scenario is that several competing form factors may emerge. However, we think it much more likely that the various players will agree on a single standard for displays.

In the consumer arena, these devices may also combine other functions. For instance, we are already beginning to see PDAs that can play MP3 music files. In the future, with the combination of Bluetooth or a similar short-range connectivity technology, they could be used to do anything from controlling the heating and air conditioning in your home to capturing diagnostics from your refrigerator, TV and other appliances and automatically sending the data to the manufacturer via wireless email.

However, this combined device will not do everything. For instance, it will not replace a laptop's larger screen for Web browsing or handling electronic forms--although intermediary, tablet-sized, battery-operated systems may evolve for those functions. The cell phone/PDA also will not replace the laptop or desktop as a general computing and number-crunching system or as a platform for writing and reading reports or spreadsheets.

The one real wild card in this scenario is whether cell phones actually do have health risks. If it turns out that they do give you cancer because of the microwave transmissions so close to your head, then everything will need to be rethought, and corporations will have to assess their liability risks in giving these devices to workers. This has the potential of being the cigarettes scenario of the 21st century.

Corporate IT groups should anticipate the day when they will need to manage cell phones and PDAs and, eventually, combined devices. They should start defining standard management practices that minimize the likelihood of runaway costs. Meanwhile they will have to deal with multiple devices as the front-end standards development works its way through the normal economic processes.

Meta Group analysts Peter Burris, Val Sriber, Jack Gold, Donald Carros and William Zachman contributed to this report.

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