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New MailStations sleeker, but Web access limited

The company plans to update its MailStation email terminal early next year, but don't look for the products to support full Web surfing anytime soon.

Cidco plans to upgrade its MailStation email terminal early next year, but don't look for the products to support full Web surfing anytime soon.

"Email is the 'killer app' on the Internet," William Sole, Cidco's executive vice president, said in an interview Friday. Email has been the company's focus with its $99 MailStation, which handles email and can download some basic content from Yahoo.

Two new models that the company will officially announce next month offer largely incremental improvements to the device, including a sleeker look, a larger keyboard and a new brand name: Mivo.

The $129 Mivo 200 adds a navigation pad, longer battery life and faster modem--56 kbps compared with 33 kbps on the original MailStation. The $149 Mivo 300 has an improved gray-scale screen, allows people to view photo attachments, and supports HTML content.

In fact, the Mivo 300 has a built-in mini-browser capable of viewing many Web sites, although Cidco is not enabling full Web browsing. Instead, the company plans to offer Web clipping similar to what AvantGo offers for Palm and Windows CE handheld computers. Initially, the content will come from Yahoo, although Cidco said it is talking to other companies about expanding what it offers.

The new models will also sport higher monthly charges than the year-old MailStation, which has a $9.95 monthly service fee and will continue to be sold as the Mivo 100 MailStation. The Mivo 200, which is slated to ship in the first quarter of 2001, will have a $12.95 monthly fee. The Mivo 300, set to debut by midyear, will require a $14.95 monthly service fee.

An open question is whether consumers will continue to snap up the devices once their monthly service fees approach those of traditional, full-service Internet service providers, most which provide unlimited email and Web access for about $20 per month. Sole said he believes consumers will be comfortable with the price.

By limiting its focus to email, Cidco has been able to do what other Internet appliance makers have been largely unable to achieve: offer a product that is significantly cheaper than a PC without having to subsidize hundreds of dollars of the cost. Cidco does subsidize some of the initial price of the device to retailers, although the cost of making the original MailStation is close to its $99 price tag in stores.

Cidco's focus allows it to do more than just come in at a price below other Internet appliances.

"It's a very simple device," said Bryan Ma, an analyst with market researcher IDC. "That's a very big asset."

Ma said email-only appliances are a niche, although that's not necessarily a bad thing because Cidco has been the one getting all the deals with U.S. retailers. The company now sells through 12,500 stores, including RadioShack, Kmart, Staples, Best Buy and Target outlets.

IDC forecasts the email terminal market will grow from 540,000 units this year to more than 4.6 million units in 2004. Ma said much of that growth will be overseas, in areas with high demand for email but low PC use.

Morgan Hill, Calif.-based Cidco started its appliance efforts in the late 1980s by making caller ID boxes. But it recently decided to get out of the telephony business entirely and focus on Internet appliances. The company has a $10 million advertising campaign this quarter, and Sole said Cidco can meet its goal of 100,000 subscribers by year's end, up from 38,000 at the end of September.

"I think everything is in place for us to get there," Sole said. Although Cidco is still losing money, Sole said the company has enough resources to make a go of the Internet appliance business.

Both the Mivo 200 and Mivo 300 still must be tethered to a phone line, but Cidco has plans to take advantage of the fact that its device is small and portable.

"We don't see it tethered forever," Sole said.

Another opportunity is the possibility of developing a closer relationship with Yahoo. In theory, this would make it easy to pitch the higher-end device as a My Yahoo machine, offering access to Yahoo email and content.

"It's a possibility," Sole said, while stressing that no such product is under development. The company has had preliminary discussions about offering consumers access to their Yahoo mail via a Cidco device.

If Cidco continues to add features, Ma cautioned, the product may lose its simplicity or its distinction from full-featured Web browsing appliances.

"I think its a fine line," Ma said. "They have to be careful."

The company itself is leery of boosting its capabilities too fast and pricing itself out of the low-end market it has created. Sole said the company has learned a lesson from its $500 Web-browsing phone, which ended up being too expensive to catch on.

"It overshot the market," Sole said. As a result, the company is moving slowly to add Web browsing and has no plans to include support for broadband connections in any of the new models.

"Our business is not high tech," Sole said. "For us, high tech equals high cost."