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Palm cuts handheld prices

Growing sales of personal digital assistants prompt Palm Computing and its rivals to outdo each other in pricing and features.

Palm Computing cut prices up to 17 percent on its PalmPilot handheld organizers today as the portable computing device market continues to heat up.

Growing sales of handheld devices are prompting Palm and the hardware licensees of Palm rival Microsoft to outdo each other in pricing and features.

With the price cuts, the Palm III, Palm's top-of-the-line organizer, drops from $399 to $369. The PalmPilot Professional falls more than 16 percent from $299 to $249. By contrast, Palm-sized organizers using Microsoft's CE operating system from Casio and Philips currently sell in the $350 to $399 range.

In addition, customers who buy either model get a mail-in certificate for a free "Palm Travel Pack," an application bundle that includes U.S. maps, destination guides, and a tutorial on making travel plans on the Internet.

Palm will keep up the pressure in the next few months as well, sources said, and will likely drop basic PalmPilots to below the $200 mark.

New features are coming rapidly as well. Microsoft earlier this week released a new version of its CE operating system, called CE 2.11, that will allow hardware manufacturers to build relatively large handheld devices with better screen resolution and improved network connectivity. The name for this new class of machines is "Jupiter."

Sharp will release its first Jupiter products, which will be slightly smaller than notebook computers, in late October, while Hewlett-Packard and Compaq will follow with notebook-sized Jupiter devices in late 1998 and 1999. Further details on Jupiter will come out on October 12 at Microsoft's Developers Conference.

Microsoft this week also rolled out an initiative with major publishers and electronics manufacturers that will seek to establish technical standards for electronic book publishing. The market for e-books is virtually nonexistent today, but Microsoft's history shows that a successful standards push early on often leads to a lucrative and dominant position for the company later.

Not to be outdone, Palm, which is a division of 3Com, is expected to announce a thinner and more powerful handheld device code-named Razor next month. Razor devices will be around one-third of an inch thick, substantially slimmer than existing PalmPilots, and come with a rechargeable lithium-ion battery and more memory, said sources. In addition, Razor PalmPilots will support color screens.

Razor will prompt more price cuts, sources close to Palm predicted. The existing PalmPilot Personal, Professional, and Palm III devices are subsequently expected to be discounted, with the Personal edition priced around $150, the sources confirmed earlier this year.

News.com's Stephanie Miles contributed to this story.