Commentary: Palm's changes for the better

By Ken Dulaney, Gartner Analyst

Palm has finally replaced its first wireless PDA, the Palm VII, with the i705, a greatly improved machine supporting the much-needed always-on mode.

	See news story: E-mail is key to new Palm device

The packaging of the machine is extremely good, a sign of the continued evolution of a successful design. At 5.9 ounces, the i705 is about the size of Palm's lightweight M500 but adds a Mobitex radio, with service through Cingular Interactive in the United States.

The i705 uses a rechargeable lithium battery, which eliminates the inconvenience of swapping batteries, and its antenna is fixed, or built-in, to enable continuous wireless e-mail. However, Gartner believes that the i705's 160-by-160-pixel resolution and its 8MB of RAM are technically below par for an advanced machine.

The unit is priced at $449, which Gartner believes is fair. The wireless service can be priced three ways:

• $20 per month for up to 100KB of data.

• $35 per month for a year's worth of unlimited service.

• $40 per month for unlimited service.

Gartner believes that Palm missed an opportunity to use these recurring revenue streams to drive down the price of the i705 to where it would appeal to a larger constituency. Gartner estimates that diverting a small amount of the wireless revenue stream over the 18 months that people typically keep PDAs would have permitted Palm to drive the price down below $300.

Buyers should note that they will probably need to consider becoming AOL users to take advantage of some of the i705's core functions. With AOL, people with the devices can get instant messaging--something not available from rival Research In Motion (RIM)--and Gartner believes that many i705 customers will sign up for an AOL instant messaging account at a minimum. This may pose a problem, however, for some enterprises due to AOL's consumer focus and for those that do not permit AOL functions.

The i705 represents an attractive option for small businesses and individuals looking for its specific features. Gartner also believes that the i705 is a solid offering for large businesses that use Palm as standard. However, for the i705 to achieve major success in the corporate market, it must succeed in handling enterprise e-mail, a function that competitor RIM has performed well to date.

Palm's MultiMail application bundled with the device lets individuals redirect e-mail from PCs to Palm and out through the Cingular Interactive Mobitex network. But as with all similar functions, this one requires the machine to be left on, a practice not generally accepted by businesses because of the security risks of unfettered PC-based rerouting of e-mail. The challenge for Palm will be to get businesses to install Palm Wireless Messaging Server centrally behind enterprise firewalls, as is done for RIM Blackberries today.

Palm customers formerly carrying RIM devices can now carry a single machine. Although the i705 lacks a keyboard, it supports a huge base of applications and already has far more Web connections than RIM.

(For a related commentary on the forecast for wireless PCs in 2002, see gartner.com.)

Entire contents, Copyright © 2002 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.