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New PalmPilot due next month

The Palm III X, set to be released in late February, will feature a clearer display and expanded memory in the same design as the Palm III.

3Com is set to introduce its latest PalmPilot next month, fortifying the company against Microsoft's handheld onslaught.

The Palm III X, to be unveiled in late February, will feature a clearer display and expanded memory in the same form factor as the Palm III, according to sources. In the same time frame, 3Com is expected to finally release its much-anticipated "Razor" product, which will sport a slimmer case and an enhanced battery.

Palm Computing's next move has been widely anticipated since the release of the Palm III last spring. Although Palm currently dominates the palm-sized market, it faces tough competition from Microsoft and its partners with their devices based on the Windows CE operating system.

Market research firm International Data Corporation predicts that the market share of Windows CE devices, which currently account for 15 percent of the palm-sized market, will reach 55 percent in 2002.

Additionally, the new Palm III X will feature a clearer screen than existing Palm IIIs, with less reflection when used outdoors. Palm III X will include Microsoft Outlook synchronization, which was previously only available as an add-on from companies like Puma.

The device will have an estimated retail price of $369. Subsequently, Palm IIIs will be discounted to $299, according to a report in Computer Retail Week.

"The conventional wisdom is that [Palm III X] takes the place of the Palm III," said Jim Turley, an analyst at Microprocessor Report, with Palm III prices dropping as a result. Turley predicted the retail price of the Palm III will drop to around $200.

"The price needs to stay around $300, because that makes the purchase a 'one-spouse decision'," Turley said, explaining that most people are comfortable spending $300 without discussing it with their mate.

"What you're going to see happen are price decreases as new platforms are introduced," said Gerry Purdy, of industry newsletter Mobile Insights.

Palm III X will offer 4MB of memory to store more contact information and applications.

Palm is also close to releasing a product with a color display, according to some sources. Because color displays add to the cost and size of the device, one of Palm's chief competitors finds it unlikely that 3Com will integrate the technology into Razor.

"Razor is thinner, and it's hard to get color screens much thinner," said Phil Holden, group product manager of Windows CE at Microsoft. Microsoft, however, is keeping pace with its own developments which it claims will be superior, adding color displays to palm-size PCs in the U.S. later this spring.

Shortly after the release of the Palm III X, Palm will introduce its much-delayed Razor product, dubbed the Palm V. Featuring a rechargeable lithium-ion battery and a revamped case, the Palm V will also come with 4MB of memory and an enhanced display.

Razor, which was expected to be announced last year, was delayed by the departures of Palm co-founders Donna Dubinsky and Jeff Hawkins.

"A lot of people expected Razor to be announced in late December," at the Developer's Conference, Turley said.

Palm seems to be sticking with the branding strategy announced at the Palm Developer's Conference in December, where the company unveiled its Palm VII wireless device. At the time, Janice Roberts, acting head of Palm Computing, comparing the branding strategy to BMW's, explained that the Palm VII's designation was not a place holder for future products but a moniker for a separate line of wireless products.

Palm Computing declined to comment.