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Palm looks to add wireless to all devices

The handheld computer maker will both simplify and expand its product line with an eye toward wireless Internet access.

    Palm is going wireless in a big way.

    Later this year, the handheld computing specialist will both simplify and expand its product line with an eye toward wireless Internet access. Right now, only the Palm VII can directly hook up to the Internet.

    In the relatively near future, Palm will market versions of the Palm III and the Palm V that contain built-in capabilities for wireless communications. These new products could contain all the technology necessary for direct wireless communications, or they might contain Bluetooth chips. Bluetooth chips are radios that allow devices to hook into networks without wires.

    Although the exact implementation of these technologies is yet unknown, Palm's drive toward a more unified product line wrapped around connectivity is a certainty, say sources and company executives, especially since competitors already have announced plans for similar products.

    "We will put wireless connection capabilities into all our handhelds," said Michael Mace, vice president of product strategy at Palm. "Some people want an integrated product that provides wireless Internet access. Other customers will want a two-piece solution. Eventually, everything gets wireless access of one sort or the other."

    Almost since it began aggressively expanding its products last year to include wireless Internet access and new designs, the company has taken heat for its confused product strategy, which runs the gamut from the wireless Palm VII, on the high end, to the low-cost Palm IIIe.

    The relatively dramatic strategy shift, despite Palm's solid 70 percent market share, reflects the newly-public company's realization that the market for handheld devices is about to be rocked by the invasion of WAP-enabled cell phones and wireless devices. Palm, along with rival Microsoft, is attempting to position itself to extend its domination of the PDA world as wireless connectivity becomes more prevalent.

    Unlike its current product lineup, which consists of the stand-alone Palm V and Palm III PDAs and the wireless Palm VII, Palm will work to include either wireless connectivity or Bluetooth throughout its products, according to Palm's Mace.

    Although the Palm VII will not go away, the Palm III and Palm V each will be outfitted with some type of communication technology, he said. Bluetooth chips embedded in PDAs would allow the device to talk to a Bluetooth-enabled cell phone, for example, he said, which would technically qualify as a wireless technology.

    Other sources predict the re-launch will be even more drastic. The company may streamline to offer two products--the Palm III and Palm V--and market two different versions of these: one with Bluetooth and one with wireless connectivity. Palm's Mace refutes that prediction.

    At some point, a re-branding effort also will be part of the overhaul. The company realizes that the Roman numeral naming it has so far adopted is already confusing and will become more so in the future as the product line expands. Mace declined to confirm the timing of such a re-launch, but he did not rule it out.

    "Any company that tells you it's finished and tells you it's figured out what its naming and branding is, is pulling your leg," he said. "It always evolves as you bring new products to market."

    Others were more blunt: "Roman numerals are difficult to brand," said a source close to the company. "There will be a simpler naming convention."

    The move may stave off Palm's competitors, especially upstart RIM, which this week announced its first wireless PDA.

    "Wireless today is important. And in the next 24 months it will become very important," said David Thor, research director of ResearchPortal.com. "I think it will be very important to have as many wireless offerings as wired offerings."

    Palm will be able to add the wireless functionality to the Palm V form factor--which will probably get somewhat bigger as a result--by exploiting some of the technical advances made since the release of the Palm VII. The wireless antenna will no longer be external; it will be integrated into the device in the future, sources say.

    This also will allow always-on wireless Internet access, unlike the Palm VII, which requires that users flip up the antenna to access the Palm.net service. Like RIM's new PDA, this type of device will be able to offer instant messaging, with some tweaks to the chip architecture and Palm.net wireless service, sources said.

    "Palm is now in a situation where they have a direct competitor (RIM) which has a technological advantage over them," said Matt Sargent, a handheld analyst with ARS. "This makes huge sense for Palm."

    The drastic changes will require major engineering and marketing efforts, but Palm is flush with cash, pulling off one of the most successful initial public offerings this year. The company raised $874 million in the IPO, excluding underwriting fees and other costs.