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Palm casts corporate bait

In one step toward the company's big business aspirations, the i705 wireless device has exceeded sales expectations. Are pent-up orders responsible?

SAN JOSE, Calif.--Palm told analysts Wednesday that initial sales of its i705 wireless handhelds have been surprisingly strong, a good sign as the company focuses more on wireless devices and those aimed at large businesses.

The company said it sold 13,000 of the i705 last week, exceeding expectations for its first week of introduction. More than 4,000 of the $450 devices, the successor to the Palm VIIx, were sold through Palm's Web site.

The company was also encouraged that most of those who bought the device opted for pricier, unlimited wireless access, rather than a cheaper option that allows access to about 50 e-mails a month.

Palm's plans to split its hardware and operating system businesses have put increased pressure on both sides of the company to become more innovative.

As it prepares to become just one of many handheld makers using the Palm operating system, Palm's device unit is taking aim at corporate customers. In a meeting with financial analysts here, Palm outlined its strategy in that area, which analysts say will be critical for the hardware unit.

CIBC World Markets analyst Thomas Sepenzis said the strong initial sales of the i705 indicate that there is still healthy demand among big companies for Palm devices.

However, Sepenzis said it is still unclear how much of the initial i705 sales were based on pent-up demand for the device. Palm had originally said the handheld would come out last year, but it was delayed. Details about the device were disclosed last August in a filing with the Federal Communications Commission.

Although the company estimates that 80 percent of its handhelds are used in offices, less than 20 percent are purchased directly by corporations. Chief Financial Officer Judy Bruner said that, over time, the goal is to boost that number to 50 percent, although companies may purchase through a reseller or system integrator, rather than directly from Palm.

Palm has beefed up its corporate sales efforts, hiring about 40 people in that area. Chief Operating Officer Todd Bradley said that number is unlikely to grow in the short term. However, the company is looking to boost its corporate effort through relationships with software companies. It announced a partnership with Siebel Systems last year and hopes to bring on three more companies by June.

Palm on Wednesday also showed off for the first time a program that allows mobile workers to securely access their company's SQL database from their handhelds. The Palm Wireless Database Access Server, slated to ship in the spring, is actually based on a program released by ThinAirApps just before it was acquired by Palm last year.

Palm has already announced a server-based program, now in testing, that will allow companies to give workers secure access to their corporate e-mail. That program, also developed by the ThinAirApps team, is scheduled for release by summer.

In addition, the company talked about another wireless handheld it plans to introduce in the fall. The device, which will run on the GSM (Global System for Mobile Communications) and GPRS (Global Packet Radio Service) networks, will be able to make phone calls but will look like a traditional handheld.

According to Bradley, next year the company plans to introduce a handheld with built-in support for Wi-Fi, or 802.11 wireless networks.