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Latecomer Palm enters China

Although the handheld company arrives years after its competitors, China could still become its most lucrative market in Asia after Japan.

    Palm has launched its handhelds in China, in what could be its most lucrative market in Asia after Japan.

    However, the handheld maker's entry on Tuesday comes years after low-priced domestic brands and rival handhelds that run on Microsoft's Pocket PC operating system have sewn up the market.

    "Palm is definitely a latecomer to the party. They missed the boat," said Bryan Ma, research manager at IDC Asia-Pacific.

    China has the largest handheld market in the Asia-Pacific region outside Japan and accounted for 68 percent of total shipments in the region last year, according to IDC.

    "Today we begin selling the world's favorite handheld into the world's largest market," Todd Bradley, CEO of Palm's Solutions Group, said in a statement.

    Analysts have attributed Palm's tardiness to the of native Chinese-language support in the Palm OS, a hurdle that domestic handheld makers and Pocket PC software overcame years ago.

    Hong Kong-based Group Sense Technology, a major player in China's handheld market, doesn't feel especially threatened by Palm's entry, spokesman Richard Chee said.

    "Users in China need excellent Chinese text input, and they don't trust foreign brands to get it right," he said.

    Also, he asserted, only a small number of Chinese buyers will be able to afford the pricier products from Palm. Group Sense handhelds start at $60.

    Palm will introduce both high- and low-end devices in China, including the color-screen $399 Tungsten T and budget Zire handhelds for $99. It will also sell the m500 at an undisclosed price.

    Ma said Palm's entry into China comes as demand for handhelds shrinks in the Republic. Compared with 2001, handheld computer shipments in China shrank 15 percent last year, he said.

    The bulk of the market is owned by sub-$150 handhelds made by domestic companies such as HiTech and Min Ren, Ma said.

    "A lot of these handhelds are bought as corporate gifts. And in 2002, firms switched to giving away digital cameras," he said. Only 10 percent of the market belongs to Pocket PC handhelds and gray-market Palm-based handhelds. In the rest of Asia and globally, Palm and Pocket PC handhelds are No. 1 and 2 in market share, respectively, he said.

    However, Ma added that Palm handhelds can expect to see market share in China grow from 4 percent today to 11 percent in 2007, while market share for Pocket PC handhelds is expected to grow to 17 percent in the same period.

    This growth represents huge shipments that Palm can't ignore, he said.

    CNETAsia's John Lui reported from Singapore.