The two companies say they will give a $150 mail-in rebate to customers who purchase a Handspring Treo 180 communicator and choose one of T-Mobile's monthly service plans with 10MB or more of monthly downloads between now and Dec. 31. To qualify for the rebate, buyers must commit to 121 days of T-Mobile's service, which starts at $39.98 a month for cellular phone service and Internet access. Cingular Wireless, T-Mobile's main competitor, charges $39.99 for the same set of services.
The Treo 180 normally costs $249.
While some PDAs and communicator devices like the Treo cost $600 or more, most unit sales in the PDA market come from products priced at $199 or below, analysts say.
"Handhelds are still having trouble selling beyond its core audience and into the mass market," said Alex Slawsby, an analyst with research firm IDC. "But devices are getting cheaper, and the number of devices in the sub-$200 range is increasing, which will help growth."
Despite tremendous growth rates in 1999, the handheld market dipped 2 percent in the third quarter of this year compared with the same period last year.
In anticipation of the holiday season, Handspring rivals Palm and Sony began cutting prices in September.
Sony cut prices on several of its Clie devices in October. The consumer-electronics giant dropped the price on its entry-level SL-10 from $149 to $129 and its SJ-20 from $199 to $179. It also cut its SJ-30 from $299 to $249 and its T665C from $399 to $349.
Palm lowered the price on its i705 device from $399 to $199 on Nov. 1 and its m515 device from $399 to $349 on Sept. 27.
The Treo rebate offer allows Handspring to take a swipe at all but the least expensive PDAs, such as Palm's Zire, during the holiday season.
At $99 the Treo 180 offers the same price and same basic operating system of the Zire, but with more capabilities such as wireless e-mail.
The rebate offer is available only through Handspring's Web site, the company said.
Last month, Handspring released a software update that allows its Treo 180, Treo 180G and newer Treo 270 to work on T-Mobile's GPRS (general packet radio service) network.
Handspring has been heavily promoting its Treo phones lately. The company is also offering a free DVD player to customers who purchase a Treo 270 or Treo 300 via its Web site.
News.com's Richard Shim contributed to this report.