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Palm, Handspring lose ground to Microsoft

Palm and Handspring see a decline in market share, losing some ground to devices running Microsoft's Pocket PC operating system.

    Palm and Handspring saw a decline in their share of the handheld market in January, losing some ground to devices running Microsoft's Pocket PC operating system.

    On Tuesday, market researcher PC Data reported that Palm had a 60.5 percent share of the U.S. retail market in January, down from 65 percent in December. Handspring, which licenses the Palm operating system, also saw its share drop, to 26 percent from 27 percent.

    Meanwhile, Pocket PC-based handhelds gained market share. Compaq Computer's iPaq handheld doubled its share, to 4 percent last month from 2 percent in December. Hewlett-Packard grabbed 3.5 percent of the market, up from 2 percent. And Casio rose to 2 percent from 1.5 percent.

    PC Data analyst Stephen Baker said Palm and Handspring garnered a bigger share in December than in January because of holiday-related purchases of their less expensive models. But Baker added that the new figures probably don't signify a long-term change in market share. That's because sales of Pocket PC-based handhelds, which are sold more often to businesspeople than are Palm-based handhelds, are less seasonal, Baker said.

    On a related note, Baker said the average selling price for all handhelds was $296 last month, up from $280 in December.

    He said the rise was due to the fact that the pricier Pocket PCs made up more of the market in January. In addition, he said, Palm is experiencing a post-holiday jump in average selling prices. Palm heavily marketed its entry-level m100 and low-end IIIxe handhelds during the holidays but is now more aggressively selling its high-end models.

    Last week, Palm announced a $100 rebate on its top-of-the-line Palm VIIx wireless handheld and said it will start selling a handheld with wireless Internet access in Japan later this year.

    Although handheld sales in units and dollars dropped substantially from December, unit sales were still double those of January 2000, Baker said. Revenue from handhelds was up 85 percent compared with a year ago.