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Palm cuts price of top-end model

Looking to compete this holiday-shopping season, Palm chops the price of its top-of-the-line m505 handheld. Will color-screen products lose their power to command premium prices?

Palm has chopped $50 off the price of its top-of-the-line color m505 handheld, bringing the model to $399 in time to compete for holiday sales.

The move is the latest in a series of price cuts in the handheld market but is the first drop for the m505, which debuted this spring.

Handspring recently cut the price of its lone color-screen model, the Visor Prism, to $299, while Palm has already lowered the m505's black-and-white sibling, the m500, to $329, from its original price of $379.

Palm cited a desire to focus on selling the m500 and other current models this holiday season as its reason for delaying the launch of a new wireless model it originally had promised would debut by the end of the year. Palm has received approval from the Federal Communications Commission for such a device, identified in its filing as the i705.

Black-and-white handhelds have tumbled in price this year, with Palm's low-end m100 now selling at less than $100. At the high end, buyers have tended to pay a bit more and go color. The m505 quickly proved far more popular than the monochrome m500, which was initially priced only $50 below the color model.

Although color-screen handhelds have traditionally been able to command a premium, prices in that segment may also be headed for a fall. "Our view is that color will (be a commodity) reasonably soon behind monochrome," said Bill Crawford, an analyst at U.S. Bancorp Piper Jaffray.