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Palm to introduce trio of devices

The market leader in handhelds gets set to announce three new devices for the fall as it hopes to see continued economic improvement in its hardware business.

Palm will announce Wednesday three new devices for the fall, as it hopes to see continued economic improvement in its hardware business.

The company's hardware division will announce two additions to its Tungsten line of devices aimed at business users and a replacement for its popular $99 Zire device for consumers, according to sources. Each of the devices will use an updated version of the Palm 5 operating system. One of the upcoming devices, the Tungsten E, opens up a new area for Palm, targeting business users with a familiar design while using a $199 price to attract consumer-market volumes. The business market tends to tolerate higher prices while the consumer market brings in higher numbers of units.

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Anthony Armenta, product manager, Palm

Palm representatives declined to comment.

The new devices will prepare the company for what it sees as upcoming growth opportunities.

"We notice many indications of a new growth wave in the making for the mobile-device industry," Eric Benhamou, Palm chairman and interim CEO, said in a statement earlier this month when Palm reported first-quarter results.

Palm's prospects have been improving after several quarters of volatile results. Still, the horizon isn't all blue skies. The company said that although average selling prices were up from $167 to $231 during its fiscal first quarter 2004, shipments were down 21 percent compared with the same quarter a year ago, to 645,000 units.

The upcoming holiday season will be a prime opportunity for the company to get its numbers up, and Palm's new $99 Zire could play a key role. Last year's Zire, which was also priced at $99, helped to stoke demand throughout the year, becoming the company's fastest-growing handheld and helping to reverse Palm's fortunes. The company's Zire 71 has been popular as well, but the $99 price tag on the original Zire was the main attraction for consumers.

Like that original model, the new Zire, the Zire 21, will use a similar plastic case, monochrome screen and no backlight. But it will come with 8MB of memory and a more powerful processor and use an updated version of the Palm 5 operating system, according to sources.

Palm will also be looking for higher shipments with the Tungsten E, which reaches back for Palm V owners who haven't upgraded their devices. The Palm V family is one of the company's more popular lines, attracting customers with its sleek design, which, according to sources, is what Palm has in mind with the $199 Tungsten E. The new device's color screen will have a resolution of 320 pixels by 320 pixels, 32MB of memory and a Secure Digital expansion slot. The device will come with a cable instead of a cradle for synchronizing with a PC, and it will use a Texas Instruments OMAP processor.

According to sources, one of the key features of the Tungsten T3 will be the screen, which will come with a virtual handwriting recognition area and give individuals a larger display area for viewing content. The $399 T3 will come with 64MB of memory, Bluetooth connectivity, a 400MHz XScale processor and a color screen with a resolution of 320 pixels by 480 pixels. The T3 will use a sliding case similar to that of the Tungsten T and T2 devices.

Palm is in the process of acquiring rival Handspring and is planning to spin off its operating system unit, PalmSource, just before that deal is completed later this year. This quarter, Palm revealed a new name, PalmOne, for its hardware division, formerly known as the Palm Solutions Group.

The acquisition of Handspring and the spinoff of PalmSource as a separate public company should be completed by the end of the company's second fiscal quarter. The familiar "PALM" ticker symbol will be replaced by PalmSource's "PSRC" and PalmOne's "PLMO."

In related news, Handspring hosted events in Boston and New York last week where representatives said the company is working with cellular carriers AT&T Wireless, T-Mobile USA, Sprint and Cingular to make the upcoming Treo 600 device compatible with their networks. The carriers have not completed certification of the device.