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Report: Palm, Handspring Communicators to Fail

A report released Monday by a consulting and market research firm claims that devices from Palm and Handspring that combine wireless communications and personal information management (PIM) and other handheld functionality will fail.

The report was issued by Strand Consult. Palm recently released its i705 handheld, which provides always-on e-mail access and Handspring recently released its Treo device, which combines telephone and handheld functions.

However, the study notes that, by entering the wireless communications arena, those companies, which dominated the handheld business, now have extremely powerful competitors. The study claimed that neither Palm nor Handspring has enough clout in the distribution channel to compete with wireless device giants such as Nokia, Sony Ericsson, Siemens and Motorola.

While 10 million handheld units, led by Palm and Handspring, were sold in 2000, 410 million phones were sold by their new competitors, the study notes. In addition, the study says that Handspring and Palm also must compete on platform level with another giant: Microsoft.

While Microsoft seemingly is in the same boat as Palm and Handspring, it actually is much more powerful, the report asserts. That's because it can tie into its existing customer base of Office, Exchange and Hotmail users. Microsoft's platform for smart phones will integrate tightly with those applications, the report notes.

The market for so-called smart communicators is just now getting off the ground. The recently released Handspring Treo and Palm i705 have garnered a lot of attention. Nokia's 9210 communicator, which was released last year, has sold well, according to most market research studies.

The same dynamics noted in the report, in which existing wireless handset vendors have a leg up on Palm and Handspring, also would seem to favor the Symbian platform. Symbian, which is used in the Nokia 9210 communicator, is co-owned by Nokia, Sony Ericsson and Motorola.

All those vendors recently have announced forthcoming communicators based on the Symbian platform. Similarly, a variety of phone vendors also have thrown their support to Palm while Microsoft has reported adoption only by a handful of second-tier phone manufacturers.

The bottom line is that Palm and Handspring don't have a fighting chance in the race to develop wireless smart communicators, the study concludes.

Despite the gloomy prediction, however, Handspring announced Monday that it has broadened its U.S. distribution channel for Treo. That device is now available in selected Best Buy, Staples and CompUSA stores, the company announced. In addition, the company announced that Cingular would become the latest wireless operator to distribute the Treo device.

The market for "smart" communicator devices is expected to grow rapidly, the study notes. The increasing availability of next-generation 2.5G and, eventually, 3G communications will ensure the market for the all-in-one devices will grow quickly.

The findings are in the report: "Strategic Challenges In The Future Market For Handheld Devices."

  • David Haskin is managing editor of sister site allNetDevices.