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Handspring returns to the midrange

The handheld maker is aiming two devices at the midrange market, but analysts wonder if there is still room for significant growth in what once was the meat of the market.

Handspring plans to announce Monday two handhelds aimed at spurring demand in the midrange market, but analysts wonder if there is still room for significant growth in what once was the meat of the market.

As previously reported, the $199 Visor Neo and the $299 Visor Pro will find themselves in the market's increasingly crowded midrange of prices. This market segment is quickly moving from a high-growth area to a leaner and more competitive one.

"They had to come out with new products to keep the product line updated," ARS analyst Matt Sargent said Friday. "The midtier area is still essential, but there is little doubt that it's lost some of its luster and incredible growth from last year."

The midrange has been a key segment of the overall market, accounting for more than one-third of retail sales over the last three years, according to market researcher NPD Intelect.

Midrange devices tend to ship in greater numbers than their high-end counterparts because more consumers can afford them. But with all the new products in the segment, slower overall sales and upcoming color-screen devices, the midrange is getting squeezed. Both of Handspring's new handhelds feature black-and-white screens.

Consumers are skipping the midrange and looking to the low and high ends because prices and features are too close to those in the midrange, IDC analyst Alex Slawsby said.

Rival Palm is expected to announce the m125, a device similar to the Visor Neo, before the end of the month, but it will be slightly more expensive at $249. Compaq Computer also recently cut the price of its grayscale iPaq H3135 to $149, including a $50 rebate. The Palm and Handspring devices use the Palm operating system, while the iPaq device uses Microsoft's Pocket PC operating system.

Still, Handspring is sticking to a segment in which it has had tremendous success. Handspring's best-selling device, the Deluxe, was one of the first midrange handhelds and prompted competitors Palm and Sony to follow suit.

The Neo features 8MB of memory and comes in blue, red or smoke. The Pro offers 16MB of memory--a first for a Palm OS-based handheld--and comes in champagne.

Handspring spokesman Brian Jaquet agreed that the midrange is being cluttered with products. And while acknowledging that the new Visor devices are "incremental" upgrades to previous products, he said they offer more features, such as increased memory, for the same price as current products.

Jaquet added that the Visor Platinum will go away quickly but the Visor Deluxe will be part of the holiday lineup.