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Palm regains grip on handheld market

Buoyed by strong sales of its m505 handheld, the company garners nearly 70 percent of the retail market in May, its best showing since September.

Buoyed by strong sales of its m505 handheld, Palm grabbed nearly 70 percent of the retail market in May--the company's best showing since September.

Palm's own brand of devices accounted for 69.4 percent of the handhelds sold at U.S. stores in May, up from 62.1 percent in April, according to a new report from market researcher NPD Intelect.

"May looked great for Palm," NPD analyst Stephen Baker said Friday. "The m505 was just killer."

However, Baker said sales of the m500 were not nearly as strong, with the color-screen m505 strongly outpacing its black-and-white sibling.

Handspring maintained its No. 2 position in the retail market, but saw its share slip to 15.3 percent, down from 19.2 percent in April. Hewlett-Packard overtook Casio to grab the No. 3 spot. HP had 6.1 percent of the market, up from 5.4 percent in April. Casio fell to 4.1 percent from 5.6 percent. Rounding out the top-five sellers was Compaq Computer with its 2.9 percent share, down from 3.6 percent in April.

NPD's figures track only retail sales, however, and thus don't reflect the entire handheld market. Many of Compaq's iPaqs, for example, are sold to corporate customers or through direct sales. Also, the May figures predate the widespread availability of a new Sony color-screen device that is the first handheld with the Palm operating system to play digital-audio files.

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"The new Sony (Clie) didn't really show up in May," Baker said. "Early indications are that it's doing relatively well in June."

Overall, handheld sales at stores were up 78 percent over May 2000 in terms of units, but up only 55 percent in dollars--a reflection of intense price competition. The average price of handhelds was $264 in May, down from an average of $303 in May 2000.

Handhelds running the Palm operating system--including Palm, Handspring and Sony--accounted for 86 percent of retail unit sales. The average price of a Palm OS-based handheld dropped to $252 in May, down from $298 in May 2000.

Earlier this week, Palm announced a narrower-than-anticipated loss for its most recent quarter, boosted by an improvement in May sales. Palm executives said that after steep declines in March and April, sales in May returned to February's levels.