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Wi-Fi, camera focus of new Palm devices

The handheld maker will be looking to resuscitate a sputtering market when it announces its new spring line, which targets consumers and business buyers.

Handheld maker Palm will be looking to resuscitate a sputtering market when it announces its new spring line, which targets consumers and business buyers.

As previously reported,


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the Milpitas, Calif.-based company will announce Wednesday the $499 Tungsten C and the $299 Zire 71. The Zire 71 is currently available, while the Tungsten C will be available starting May 5. Both devices mark a number of firsts for the handheld market share leader.

The Tungsten C joins Palm's business product line and, for the first time, brings wireless 802.11b-based connectivity to the Palm family of devices, allowing it to connect to so-called hot spots and share network resources. Hot spots are public places that give people wireless access. The Zire 71 is the latest addition to the Zire consumer line and is the first device from Palm to have a built-in digital camera.

The devices include the latest version of the Palm operating system, 5.2, as well as bright active-matrix transflective screens with resolutions of 320 pixels by 320 pixels. The Tungsten C comes with 64MB of memory and uses a 400MHz Intel XScale handheld processor. The Zire 71 comes with 16MB and can play digital audio files. Both devices come with Secure Digital expansion slots for additional storage.

The Tungsten C and the Zire 71 are innovative devices for a company that until recently had been criticized for not innovating fast enough. However, slumping interest in handhelds and contining weak financial results may be the impetus that the market share leader needs.

Worldwide shipments of handhelds fell by 9.1 percent in 2002, to 12.1 million units, compared with 2001. And while Palm handily remains in the top spot for market share, with 39 percent of the worldwide market, the company's revenue for the current quarter is expected to come in lower than the previous year.

Palm is riding the momentum of strong sales of the predecessors to the Tungsten C and Zire 71. Palm cut the price of the Tungsten T in early February from $499 to $399, and worldwide sales have picked up 75 percent, according to the company. Palm sold more than 850,000 of the $99 Zire devices during the first five months of its existence.

Tungsten C With the Zire 71, Palm is joining a trend of integrating a camera into a handheld device, according to analyst Alex Slawsby with research firm IDC. Cell phones and handhelds have joined the craze for digital imaging, and photos are considered a high-end feature, but the Zire 71 has a midrange price.

"The Zire is well positioned for midrange dominance, which is the new battleground for consumers," Slawsby said. "A lot of the high-end devices are moving into the midrange because of price." And while the Zire 71 is only $100 less than the $399 Tungsten T and could take away some of its buyers, "it's a positive for Palm in the sense that the sale is theirs either way," Slawsby added.

Raj Doshi, a senior product manager for Palm, said that research shows that 29 percent of U.S. consumers likely to buy a handheld in the coming months want a built-in camera.

"The goal was to have a rich feature set, while keeping the price point near what an average consumer would want to pay," Doshi said.

Doshi added that while the Zire 71 is at the high end of the line, there is room left to grow in the 70 line.

The Zire 71 features a new case and Graffiti 2 handwriting-recognition software. Palm also has developed a photo application that has been integrated into the Palm Desktop application to ease viewing, organizing and basic editing functions of photos. The Zire 71 comes with a 900mAh rechargeable lithium-polymer battery.

Battery life may be a concern for potential customers of the Tungsten C because wireless networking connectivity can be a drain on power. However, Paul Osborne, a senior product manager for Palm, said that the Tungsten C gets more than eight hours of use on a charge even when wirelessly connecting to a network.

Zire 71 The Tungsten C has the same case as the Tungsten W as well as the same 1,500mAh rechargeable lithium-polymer battery and keyboard. Palm also will introduce a $99 rechargeable battery accessory, Power To Go, which doubles the battery life of the Tungsten C and can be used with any device that has a universal connector.

The Tungsten C may be a tougher sell because businesses don't have handhelds at the top of their purchase lists and wireless networking technology Wi-Fi is largely unproven, Slawsby said.

"The value of Wi-Fi in handhelds hasn't been fully articulated, and for that reason the C may be popular for individuals and businesses doing trials, but the broad market opportunity may take some time to develop," Slawsby said.

Osborne said that Palm has been working to improve the prospect for Wi-Fi on handhelds. The company has been working with a third-party developer to bring a voice over IP (Internet Protocol) program to the Tungsten C by the first half of the year and has been working with hot-spot aggregators to ensure that the device will soon be able to work on their networks.