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Palm climbs back with stronger sales numbers

The company's handheld computer sales account for 70 percent of the retail market in August, back up from its dip to 61.5 percent in the previous month.

Palm gains some lost ground in the retail market for handheld computers, according to a new report, while Handspring's popularity dipped in August.

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Driven by strong sales of its new inexpensive M100 device, Palm accounted for just over 70 percent of the retail sales in August, according to new figures from NPD Intelect. Although Palm has always been the market leader in terms of sales, data indicates that the company has at least temporarily halted a slide related primarily to gains made by Handspring. In July, Palm had dipped to a 61.5 percent share of the retail market.

Handspring, whose line of Visor personal digital assistants (PDAs) is also based on the Palm operating system, accounted for 15.5 percent of retail sales in August, compared with 26 percent in July. Although Palm has maintained a healthy lead overall, Handspring's Visor Deluxe became the single best-selling PDA within months of its initial release to retail stores.

That trend seems to have reversed itself, with Palm's release last month of the M100, a $149 entry-level device with a redesigned case. The M100 has apparently lured some customers away from the basic Visor model, which is also priced at $149.

These sales fluctuations are fairly typical of the PDA business this year, according to Sima Vasa, vice president of technology products at NPD Intelect. Because the market is growing so rapidly, with more devices sold in the first six months of 2000 than in all of 1999, these sudden shifts are not unexpected.

"It's a trend that we see normally," Vasa said, noting that these devices are gaining widespread appeal. "The PDA market is now out of the early adopter phase."

Customers were likely attracted by the relatively cheap price tag on the M100, Vasa said, an indication that Handspring has been differentiated by price, not the expandability it offers with the Springboard expansion slot.

"We saw a pretty decent swing in sales to Palm," she said. "When the consumer goes into the store, they now have an offering from Palm at the same price point as Handspring."

With handheld computers at the brink of mass appeal, it is likely that the current standings will continue to shift. For example, CIBC Oppenheimer analyst Thomas Sepenzis recently said he expects Handspring sales to grow at least 75 percent over the next three to five years, eclipsing Palm in revenue and unit shipments.

Handspring has a variety of new products in the pipeline, including the VisorPhone. Set for release by the end of the year, the VisorPhone is a snap-on cartridge that fits in the Visor's Springboard expansion slot and turns the device into a cell phone. Handspring is also expected to introduce its first PDA with a color display later this year.

Palm and Handspring's competitors continued to lag far behind in August.

Devices based on Microsoft's Pocket PC operating system did make a bit of headway, though. Compaq Computer's iPaq accounted for 6.6 percent of retail sales last month, the best showing yet of any Pocket PC-based device since the launch of the OS in April.

Hewlett-Packard and Casio, which also market Pocket PCs, each accounted for less than 2 percent of all sales last month.