IDC analyst Kevin Burden said current wireless access for handhelds is "too expensive for what you're getting back" in terms of content. Modems can cost hundreds of dollars, and monthly service charges range from $40 to $60.
That hasn't stopped a number of companies from jumping into the ring.
This week, Novatel Wireless launched its Minstrel 540 wireless modem for the Hewlett-Packard Jornada 540 Pocket PC handheld. The wireless modem, which costs $369, attaches to the back of the Jornada. The monthly service fee ranges from $25 to $65, depending on the carrier. The Minstrel 540 runs on the cellular digital packet data (CDPD) networks offered by AT&T Wireless, Verizon Mobile, GoAmerica and OmniSky.
OmniSky and YadaYada sell similar modems, as well as the services.
OmniSky supports handhelds based on both Palm and Microsoft's Pocket PC operating systems. YadaYada supports Palm devices.
Sierra Wireless also sells a modem for PDAs.
Palm offers built-in wireless access on its VII devices. The Palm VII with 2MB of RAM costs $399, and the VIIx with 8MB of RAM costs $449. Palm's wireless service costs $44.99 per month.
Joe Korb, president of GoAmerica, said his company's rates are in-line with those of other wireless services. He added that the price has been falling and will continue to fall as more people subscribe to wireless Internet service.
"Any market starts off with high prices when volumes are low," Korb said. "But if you look back, you'll see that pricing is trending down as we sign up more subscribers."
The monthly fee for GoAmerica's service in 1997, when the service became commercially available, was $99, according to Korb. Now, on Palm devices, the service costs $39.95 per month for unlimited access.
Korb expects that wireless Web access could eventually end up in the same price range as dial-up access--about $20 per month.
As for content, wireless Web subscribers currently get e-mail, news, and information about the stock market, weather and traffic. According to Burden, PDAs with wireless access will have to offer much more than this, as well as extremely personalized content, to "really take off."
"Significant content is what drives the demand for this type of device, and we're not there yet," Burden said. "At this point, it's still a novelty."
OmniSky CEO Pat McVeigh disagrees. He said the ability to communicate will drive demand.
"Communications is the killer application," McVeigh said. "Content on demand, chat, instant messaging--these are what users want from a service like ours."
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Location-based services are another significant feature, and OmniSky is working to add them to its mix. Such services offer information about local restaurants and entertainment, as well as maps. Last week, for example, OmniSky announced that it agreed to acquire NomadIQ, a provider of location-based applications for handheld devices.
Rob Enderle, an analyst and vice president of Giga Information Group, said that whatever the killer app becomes, the market with wireless services is still very young.
"It shows. Right now, they are too expensive and too limiting," he said.
Enderle added that wireless data-transmission rates are still too slow and that e-mail and Web surfing--the key features people want from these devices--are poor experiences. Most of the products run on CDPD networks, which are limited to 19.2kbps. That compares with a dial-up modem that can run at speeds up to 56kpbs.
The current data-transmission rates limit the amount of content and the level of personalization on these devices, GoAmerica's Korb acknowledged, so there is only so much that providers can do until the pipe widens.
OmniSky's McVeigh said bandwidth is important but reliability and access to information are almost as significant.
The current batch of wireless-service companies are "the only game in town, so in the short term they have a good future," Enderle said. "But they're nowhere near being on the killer-app pedestal that people have placed them on."
Still, Burden said, no one should write off these devices and services just yet.
"These companies are building their brands right now. They will be there with the content once the wireless infrastructure is built out and we have faster access speeds."