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Is Foleo Palm's folly?

A device the company billed as "a new category of mobile device" is in reality a small, underpowered laptop best suited for reading e-mail, analysts say. Photos: Palm adds Foleo to its portfolio

Palm's bid to reinvent mobile computing looks an awful lot like the current state of mobile computing, but with less horsepower.

Company founder Jeff Hawkins unveiled the Foleo device at the D: All Things Digital conference on Wednesday. Foleo is a 2.5-pound laptop PC with a 10-inch display that runs Linux. It's designed to let smart phone users read and respond to their e-mail and documents on a full keyboard with a larger screen, Hawkins said.

The idea seems to be that users of smart phones like Palm's Treo, who don't want to carry a regular Windows or Mac laptop on business trips, could use the $499 Foleo (the price comes after a $100 mail-in rebate) as a companion device to prevent their thumbs from cramping up after a long day of dashing off e-mail. It uses flash memory, so it turns on quickly without a long boot process and syncs up with a smart phone running Windows Mobile or Palm OS over a Bluetooth connection.

However, the Foleo uses an underpowered processor that isn't really suited for video, Hawkins admitted. It gets five hours of battery life. It wasn't designed to be a standalone product apart from its smart phone, although it can use its Opera browser to surf the Web over a built-in Wi-Fi connection.

It doesn't sync calendar appointments, just e-mail and contacts. And it doesn't work yet with widely used mobile e-mail products such as Research In Motion's BlackBerry software or Motorola's GoodLink software.

"I think it's probably the most disappointing product I've seen in several years," said Todd Kort, an analyst with Gartner. "To think that anyone would carry something with a 10-inch display at 2.5 pounds as an adjunct to a phone just doesn't make any sense to me."

The Foleo becomes the latest attempt at developing the "one true mobile device"--a quest that's growing increasingly crowded as PC companies push gadgets like ultramobile PCs and smart-phone companies try to outdo each other's sleek designs. And, as you might have heard, later this month Apple's iPhone will enter the field.

Hawkins said Palm will initially target heavy users of wireless e-mail who are looking for a portable device to ease the burden of relying on a smart phone as a primary computing device. It's hard to work with documents inside the small window afforded by a smart phone, and almost impossible to read e-mail at a quick glance without a lot of scrolling. That's why most smart-phone users still need to bring their laptops along on business trips--because any serious typing can't be done on a Treo, BlackBerry or a Motorola Q.

Palm thinks these people would be willing to spend the $499 to get a device that could make them more productive without having to resort to lugging around a bulky laptop on short trips. But road warriors truly concerned about laptop weight can choose from dozens of 2- to 3-pound ultraportable laptop PCs that offer far more capabilities than the Foleo, analysts say.

This is a small category of PC user. Ultraportable laptop sales only accounted for 1.5 percent of the U.S. retail PC market in the fourth quarter of last year--the busiest PC shopping season, said Samir Bhavnani, an analyst with Current Analysis West. Smart-phone users are also a small percentage of the overall cell phone market, which means a pretty small portion of the population might be feeling the pain described by Hawkins, Bhavnani said.

If you're a mobile user who's familiar with the limits of a smart phone and you don't want to carry a standard 5-pound laptop, you've probably already bought an ultraportable laptop, Gartner's Kort said.

"If you're on a two- to three-day business trip, and if (Foleo's) almost as big and almost as heavy, why not just carry the notebook?" Kort said. Business users will still need a regular PC to handle their corporate applications, and home users aren't going to want a laptop that can't show video or play games, he said.

But the attractive price could help sway some converts. The average U.S. retail cost of an ultraportable laptop was $1,778 in the first quarter of this year. That compares with the $851 it cost to buy an average laptop, and the $499 Palm wants for the Foleo, according to Current Analysis West.

And while this is a first-generation product that might not wow early adopters, it could draw more interest as developers create more applications, said Tim Bajarin, an analyst with Creative Strategies.

"It could be an interesting device as a standalone low-cost Linux computer," Bajarin said. But that's one of those chicken-and-the-egg questions: You're not going to get a lot of developers interested in a product unless there's sizable demand for the product. And there isn't going to be as much demand for a product that doesn't have a lot of applications, he said.

One way Palm and its carrier partners could create interest in the Foleo would be by bundling a Treo, a Foleo, some storage cards and an unlimited data plan, Bhavnani said. At around $799 or $899, that might attract some customers who have been sitting on the sidelines of the smart-phone scene, and that's an awful lot of people.

The real money, however, comes from the corporate users. Palm fought uphill for many years trying to get the Treo devices inside of corporate IT departments, finally agreeing to run Windows Mobile on the Treo to stimulate interest.

It's far from clear why corporations would want to give their mobile workers a Foleo, given that it would require the few vital corporate applications that could even be stored on a Foleo to be rewritten for Linux and that the device doesn't work with GoodLink or BlackBerry, Bhavnani said.

Hawkins did not reveal many details about Foleo's specifications. Representatives for Intel, Advanced Micro Devices and mobile processor powerhouse ARM were unable to immediately confirm whether Palm was using one of their products.

The product uses flash memory, but it's not clear how much will be dedicated to system memory versus storage. A Palm representative said specifications would be released this summer closer to when the product would be available.

After the success of the Treo, Palm has been searching for a new hit as it fends off rumors that it might be sold to a larger vendor or a private equity firm. Given that, it might have made more sense for the company to come up with a new design for the Treo, or software that lets Treos work more closely with existing laptops, rather than striking out on an uncertain path, Kort said.

Palm's faithful--who have stuck by the company through years of languishing development of the Palm OS--appeared underwhelmed at the announcement of Foleo, according to comments on the PalmInfoCenter blog.

"This reminds me a bit of the first wave of WinCE based laptops in the late '90s that touted instant on and fast access to applications. Or it reminds me, you know, of laptops," wrote poster "Nybble" on PalmInfocenter. Negative sentiment outnumbered positive thoughts by a wide margin on the blog.