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Handspring reads writing on the screen

Executives say they're surprised that people prefer small keyboards to stylus scribbling. Writing aside, will the trend inspire stronger sales?

NEW YORK--Handspring believes the future of handheld devices will be typed, not written.

Chief Operating Officer Ed Colligan, speaking at a CIBC World Markets investor conference here, told attendees that his company was surprised that consumers preferred entering information via keyboard, rather than using writing technology popularized by Palm's Graffiti technology.

The Mountain View, Calif.-based company's Treo 90 comes with a keyboard and color screen. Colligan says this product is the first of potentially many to include keyboard technology.

"We'll go forward with keyboard-based color products," Colligan said. Though the handhelds will no longer have a space dedicated to write directly into the device using Graffiti technology, customers can install third-party software if needed, he said.

The Treo 90 is a new breed of device for the company. It is the first Handspring organizer born outside the company's traditional Visor line of handhelds, and it is also the first organizer to shed the company's Springboard expansion slot. Instead, the Treo 90 includes a Secure Digital expansion slot.

This change in design and focus comes amid tough times in the handheld industry. Handspring has seen inventory levels grow in the United States, having a supply for its markets increase from 14.5 weeks worth in April to 15 weeks as of May 1. Compared with the same period last year, Handspring carried 9.6 weeks of inventory, according to a report released by securities firm UBS Warburg.

Competitors have also felt the pain. Market share leader Palm lowered its outlook for the current and future financial quarters, blaming weak demand. The company did announce the shipment of Palm OS 5, the latest version of its handheld operating system, to developers on Monday.

Devices using the new OS will likely begin to hit the market this fall. The Treo 90, however, uses version 4.1 of the Palm operating system.

Handspring has indicated since January that it plans to move into the communications market to compete with cell phone makers by combining handheld features and phone capabilities into one device. Yet Colligan wouldn't rule out the possibility that the company might produce another organizer.

"We have to hedge our bets about how quickly the communications business takes off," he said. "We'll make sure we have a play in the organizer space," he added.

News.com's Richard Shim contributed to this report.