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Palm to update handheld, cut prices

Palm is preparing to update its Tungsten T line of handhelds aimed at businesses and cut prices on older devices as it looks to revive the struggling market for PDAs.

Palm is preparing to update its Tungsten T line of handhelds aimed at businesses and cut prices on older devices as it looks to revive the struggling market for PDAs.

The Milpitas, Calif.-based hardware arm of Palm, called Palm Solutions Group, will announce Wednesday the release of the Tungsten T2 device, which is a follow-on product to its Tungsten T handheld, according to sources.

The original Tungsten T device was the first in a wave of devices meant to give the struggling company a boost. It did not meet sales expectations, even after a 20 percent price reduction, which led to a revenue warning from the company. However, newer devices, such as the Zire, Zire 71 and Tungsten C, have sold more successfully and have helped the company's finances.

The Zire 71 has been the top-selling device in the handheld market since its introduction, according to data from sales tracker NPD Group.

Palm declined to comment for this story.

The new device will be available starting Wednesday and will cost $399. The line will continue to stress multimedia capabilities by including a built-in digital audio player and speaker, but it also comes with twice the memory, 32MB, of the previous Tungsten T model. The device will use Texas Instruments' 144MHz OMAP1510 processor and version 5.2 of the Palm operating system. The Tungsten T2 will come with a color screen that has a resolution of 320 pixels by 320 pixels as well as integrated Bluetooth technology--which will allow the device to connect to other portable devices, such as phones and notebooks.

Sales of the Tungsten T have been up, according to NPD Group analyst Stephen Baker, but prices have been down. The Tungsten T is listed at $349 but has been selling below $320 for some time.

"That is how you would price something if you were going to liquidate it," Baker said.

The company is also making similar price moves with its older m515 and m130 devices. The m515 will go from $299 to $249 and the m130 will be cut from $199 to $179.

The handheld market has been in decline lately. In the first quarter, research firm IDC said that worldwide handheld shipments were down 21 percent at 2.45 million units. That compares with 3.1 million units in 2002. The decline was attributed to the poor state of the economy and technology industry as well as to the inability of device makers to develop a product that is considered a must-have for businesses.