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RIM takes on Palm in handheld market

Although Palm claims the lead, the company's popular gadgets now face yet another formidable competitor in the handheld computer market.

Although Palm claims the lead, the company's popular gadgets now face yet another formidable competitor in the handheld computer market.

As expected, Canada's Research in Motion (RIM) today announced the RIM 957 Wireless Handheld. The device, code-named Proton, is essentially a cross between RIM's BlackBerry email device and a personal digital assistant (PDA).

The RIM 957 features a larger screen than is offered on the company's two-way pagers, an Intel 386 processor, 5MB of flash memory, a small keyboard, an embedded wireless modem, an integrated organizer and BlackBerry email software. The company also announced a version of the device with an extra 4MB of memory.

RIM is also working to integrate WAP (wireless application protocol) support on the handheld. WAP translates Web pages designed for larger displays and optimizes the content for small screen devices. RIM is using a WAP browser from Neomar, whose browser is also used on products from Palm.

The new devices will ship in May and are priced at $499, with monthly unlimited service priced at $39 per month.

Comparisons between the Palm VII and the Proton are inevitable, as the devices tout the same features and target the same luxury gadget market. The question now is whether an organizer company such as Palm can find more success in incorporating wireless services or whether a wireless device company can persuade customers and developers to try a different brand of organizer.

"I think this is a Palm killer," said one source familiar with the company's plans.

The device is the first full Palm-like gadget from the Canadian company, which develops and markets wireless email devices and services. The company has gained a loyal following and high-profile partners--including Dell Computer, Compaq Computer and America Online--with its pager-size BlackBerry units.

Last week, the Canadian government said it would invest approximately $23.3 million in the company. RIM was unavailable for comment.

Palm, of course, is no pushover. The newly public handheld maker has dominated the market for these devices thus far and has achieved some measure of success with its Palm VII wireless device and corresponding service.


David Werezak, VP of marketing for Research In Motion, discusses the company's new wireless device.
"I have to say, I'm really impressed. This is a well-integrated piece of wireless hardware," International Data Corp. (IDC) analyst Jill House said of the RIM device. She said it is well-designed from a hardware perspective and offers better email software than the Palm VII.

"Maybe this will encourage Palm to work on stronger email integration out of the box," she added.

Like the Palm VII, the new RIM PDA will use the BellSouth wireless network. However, the RIM 957 features always-on access to the network, unlike the Palm VII. This is important for wireless messaging services or other instant messaging features.

RIM is the only company to date to offer hardware with access to corporate and personal email accounts. The Palm VII requires customers to use its own email service and usernames and does not offer access to existing accounts. Third parties, like Omnisky, also have offered add-on wireless modems and wireless services for the Palm V and Windows CE handhelds.

"The problem with the Palm was that they didn't build in instant notification," House said. "You have to give RIM credit--they're going after a mobile professional niche that has a strong email need."

Palm accounts for 70 percent of all PDAs sold, according to IDC. That number has remained fairly stable over the past year, despite increased competition from Microsoft and manufacturers of its Windows CE devices and Palm licensees such as Handspring, which makes the Visor.

Although RIM has an established base of customers, the company may have difficulty attracting software developers to create applications for the device. Palm credits much of its success to its loyal core of programmers, but resource-strapped software companies may not be able to expand their product lines to include applications for RIM, said Gartner Group analyst Ken Dulaney.

"The big problem I have with RIM's effort is that they really think their OS is where it's at," Dulaney said. "They've done a great job with a very dedicated one-purpose device, and I give them a lot of kudos for that. They won the first round, but where do they go next? I think they're going to have a lot of trouble."

The wireless gadget business is expected to be huge. According to IDC, 61.5 million people will be accessing the Internet wirelessly by 2003.