Palm lights up its first color-screen handheld

Palm Computer today introduced its expected Palm IIIc device with color display, although questions remain as to how the handheld computing market will react.

Palm Inc., as the soon-to-be-former 3Com subsidiary is now known, also today announced other hardware and service plans: the Palm IIIxe (a successor to the Palm IIIx device); a new unlimited wireless service plan for its Palm VII device; and a variety of add-on accessories and applications, in addition to its first device with a color display.

Set for a highly anticipated initial public offering at the end of this month, Palm has ridden a wave of momentum in recent months. The company's licensing strategy has gained attention with big-name licensees such as Nokia, Sony and Motorola, which have announced plans to build devices based on the Palm operating system.

Palm enjoys considerable market share lead over its competitors, including those based on Windows CE software from competitor Microsoft. The release of the Palm IIIc has been much anticipated by the company's loyal user and developer community, who hope the introduction of a color display will be the final nail in the Windows CE coffin.

But there are some clouds on Palm's horizon, analysts warn, even with today's announcements. With the introduction of the color display and correlating update to the Palm operating system, there is the chance of leaving some developers--companies that make Palm applications or Palm-related hardware--behind. The same can be said of Palm buyers. It is not clear if all older applications will work with the new color devices or if the four new color applications announced today are compelling enough to entice new buyers.

The device, priced at $449 and featuring 8MB of memory, purports to solve some of the problems color displays cause, problems that have plagued the Microsoft-based devices. Windows CE devices have supported color displays for almost a year, but users complained about the bulky size of the devices, the drain on battery life and the weight color displays added.

The Palm IIIc battery is capable of up to two weeks of battery life and can be recharged in a cradle, much like a cell phone, the company claims. However, those claims are somewhat unreliable, because battery life, especially on color devices, is heavily dependent on usage patterns, analysts say.

For example, if a Palm device is used only for address book and calendar functions, the battery will last much longer than if the device is used for the multimedia applications that the color display enables. Palm did not elaborate on the methodology of its battery life tests.

"It helps Palm, because it eliminates one of the issues that would give a user the perception that Windows CE is better than Palm," said Brian Phillips, an analyst with retail market research firm ARS. "For Microsoft, there isn't an immediate impact."

Microsoft is expected to unveil its own update later this spring, when it re-launches its handhelds as Pocket PCs.

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"Everything with Windows CE is on hold, waiting for the Pocket PC," Phillips said. "When Microsoft announces Pocket PC and rolls out in volume this summer--that's going to be the real test."

Shipping with the IIIc is a digital photo viewer called Club Photo Album To Go; a color calculator called PowerOne; Chroma Gammon, a full color backgammon game; and Internet content from AvantGo.

In addition to the Palm IIIc, the company also announced the IIIxe, the successor to the IIIx. Featuring 8MB of memory and priced at $249, the device is joined by the Palm Portable Keyboard, a fold-up keyboard priced at $99, which can be used with all current Palm devices. Finally, Palm announced that the Palm.net Internet service for its wireless Palm VII device will now offer an unlimited access option for $44.99 per month.