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S3 swims into handheld market with Diamond Mako

Once known only for graphics chips, the company announces its first handheld computer based on Psion's Revo Plus software and hardware design.

    S3 announced Tuesday its first handheld computer, unveiling a device based on Psion's Revo Plus software and hardware design.

    S3 next week will begin shipping the Diamond Mako, a clamshell-shaped personal digital assistant (PDA) offering email, calendar, address book, word-processing and spreadsheet applications. The device offers 16MB of memory, an optional 56-kbps modem and a 36-MHz ARM processor.

    The monochrome Mako will be priced at $399 and sold through retailers such as Best Buy, Circuit City, CompUSA and Fry's Electronics, as well as online retailers including Amazon.com and Buy.com.

    Since acquiring Diamond Multimedia Systems last year, S3 has aggressively targeted the booming consumer market for Internet appliances and digital devices. The Santa Clara, Calif.-based company, once known only for graphics chips, announced last month that it was spinning off a separate company to target Internet appliances.

    S3's entry into the PDA market comes as competition is heating up. The rapidly growing business is currently dominated by Palm, which enjoys 70 percent of the retail market and licenses its operating system to the next best-selling device from Handspring, which had about 15 percent of the market in August.

    The explosive growth of the PDA market--more devices were sold in the first six months of this year than in all of 1999--may work in Diamond's favor. Retail market share has fluctuated sharply over the summer. The market has been skewed by component shortages affecting both Palm and Compaq Computer. Compaq's much-anticipated iPaq Pocket PC is still not shipping in volume.

    Psion is backed by the London-based Symbian consortium, which includes Motorola, Nokia and Ericsson, and it is not as well-known in the United States as it is in Europe, where the Revo Plus has been shipping since last month. S3 opted to partner with Psion rather than with Palm or Microsoft because it believes the European company is better suited for success as PDAs and cell phones come to share more features.

    Diamond investigated using both the Palm and Microsoft operating systems, but decided that each was limited, Palm by long-term expandability and Microsoft by battery life.

    "Given where we want to go, the key things we saw in (Psion's) Epoc OS made it a better long-term candidate," said Paul Crossley, product marketing manager for Diamond. He singled out Psion attributes such as 12-hour battery life and support for Web browsing and email.

    "Symbian isn't overly well-known here in the U.S., but in Europe it's huge, and the people behind are the phone providers who are trying to attack this from another angle," Crossley said. "We tend to agree with where they're going."

    Next year, Diamond plans to release another product based on the Epoc operating system that will offer more advanced communication applications, Crossley said. The company is also looking at offering some type of digital music player, a sensible move given that Diamond was the first company to offer a portable digital music player, the Rio.

    "We didn't get in bed with Psion for this product, although it's a very strong product," Crossley said. "But we're looking at where we're going in the longer term."