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New HP tightens grip on handheld market

With its acquisition of Compaq and the consolidation of the two companies' product lines, the new company has jumped up a few places in the handheld rankings.

With its acquisition of Compaq Computer and the consolidation of the two companies' product lines, the new Hewlett-Packard has jumped a few places in the handheld rankings and is now firmly in the No. 2 spot in terms of market share.

HP handhelds
Jornada prices

iPaq prices

In the second quarter of this year, Compaq, with its iPaq devices, narrowly beat out Handspring to grab the second-biggest market share in handhelds, according to research firm IDC's shipment estimates. Palm was first. HP, with its Jornada devices, placed sixth.

HP representatives said the Palo Alto, Calif.-based company will gradually phase out some models of the Jornada handheld and rebrand the remaining models, along with Compaq's iPaq products, as HP iPaqs. The company, of course, will try to perform the turnover without losing customers to other Pocket PC manufacturers or to the Palm camp.

"We're not keeping both, we're keeping one," said Michael Capellas, former Compaq CEO and HP's new president.

After tremendous growth, shipments of handhelds have slowed recently, but HP's new merged product line gives it a bigger piece of the pie.

"If the company executes the way they should, it's safe to say that the iPaq could be No. 2 for the entire year," said IDC analyst Kevin Burden, adding that he expects demand for Handspring's Treo to wane, making it more likely HP will hold--and solidify--its position.

Demand for new products always trails off after a highly anticipated launch, Burden said in regard to the Treo. Handspring announced the devices in October of last year and staggered the launch of the Treo earlier this year after a delay in bringing it to market.

The line on the new line
HP will phase out the Jornada brand over the next six months and the remaining Jornada and iPaq products will become HP iPaq products within 12 months, according to HP spokeswoman Cherie Britt.

The Jornada 560 will be discontinued in three to six months, and the next handheld will be an HP iPaq device. The original successor to the 560--the unannounced 570, which was put on hold because of a component delay--is being canceled. A similar device using the XScale processor will get the HP iPaq name. Devices using XScale chips are expected in the summer.

The already announced Jornada 928 is still in the company's plan but is being re-evaluated. The Jornada 928 was to be launched in the summer in Europe and Asia and was expected to be available in the United States by the end of the year.

An HP iPaq product with integrated wireless capabilities is expected this year, said HP spokeswoman Nora Hahn.

HP will continue to sell the Jornada 720, which resembles a mini-notebook. However, the gadget will eventually become an HP iPaq branded device.

The iPaq 3700, 3600 and 3100 series will be phased out, but the 3800 series will remain.

The HP iPaq group will be managed out of Houston, led by former Compaq Vice President Sean Burke. Burke will report to Iain Morris, who leads the emerging technology group at HP. Morris reports to Duane Zitzner, who's in charge of the personal systems group.