RealTime IT News

PalmOne Moves Zire Upscale

PalmOne unveiled two new handheld devices in its popular Zire line on Wednesday, the Zire 31 and Zire 72.

While PalmOne's Tungsten T3 handheld, released in October 2003, is a top-of-the-line professional model with 64 megabytes of memory and a 32-bit, 400-megahertz Intel Xscale processor and a $399 price tag, the two new Zire models work the line's way up from the original budget-conscious Zire. The launch model sold more than a million $99 units in the first seven months after its fall 2002 introduction.

"The Zire 31 is still an entry-level device, but it brings in some media features," said PalmOne senior product manager Raj Doshi. "The Zire 72 pushes the media capabilities and also the wireless and business capabilities."

The Zire 31, retailing for $149, has a color screen and 16 megabytes of memory. It includes an MP3 player and a photo viewer. The Zire 72, with 24 megabytes of user-available memory, adds a built-in 1.2 mega pixel digital camera that can take photos or video, built-in Bluetooth technology and synchronization with Windows Outlook.

"We did a lot of research on customers," Doshi said, "and found that they were using the Zire 50/50 for work and personal activities." The Zire 31 targets the same buyers as the original: students, super-parents and seniors. Despite the addition of media capabilities, operation remains simple, with some fun additions. For example, PIM is jazzed up with color categories, an agenda view, a photo background option and the ability to add icons like a birthday cake to mark important dates.

The Zire 72 mixes business with pleasure, shipping with Documents to Go, an application for creating Microsoft Word- and Excel-compatible files. Users can manage photos and videos on the desktop using an included media desktop application, then synch the results back to the device. Photos can be added to the PIM contact list and also inserted into Outlook contacts on the desktop. Both models include a voice recorder.

This pair of Zires were born into a faltering market. According to IDC, the worldwide market for handheld devices declined in the first quarter of 2004, with device shipments decreasing 11.7 percent from the same quarter last year and a hideous 33.1 percent down from the previous quarter.

According to IDC, while entry-level devices such as the $99 Zire helped to grow the handheld user base, many new recruits got their budget-priced PDAs during the holiday shopping season, making the traditional Q1 slump worse than usual for the whole industry. And PalmOne was hit particularly hard, posting a sequential decline in shipments of 38.7 percent and a slip in market share from 39.4 percent to 36.1 percent.

Toshiba suffered a year-over-year shipment decrease of 34.1 percent and a sequential decrease of 48.4 percent; Sony's market share dropped to single digits on a sequential drop of 57.2 percent and year-over-year drop of 49.6 percent; Dell remained relatively unscathed, with only a 1.1 percent sequential decline in shipments last quarter and a modest increase of 2.2 percent, year-over-year, bringing its market share up 4.7 percent to 7 percent; and HP's shipments, while suffering a 32.9 percent sequential drop, rose 24.8 percent over the same quarter last year, enabling it to maintain its 25.7 percent market share.

IDC analyst David Linsalta told the introduction of two new models in the hot-selling Zire line should give the company's numbers a boost. "The Zire 72 is a very good product," he said. "It hits its target of young professionals who want a mix of media and connectivity perfectly."

Moreover, Linsalata said that entry-level devices could cannibalize sales of higher end products. He advised vendors to keep pushing into the enterprise, and bundling in more functionality.

Doshi wouldn't comment on whether PalmOne plans to release an updated Tungsten this fall or instead plans to advance the Zire line. He acknowledged the possibility of Zire siphoning off sales from Tungsten, but said, "On one level, if it does, good, at least people are buying PalmOne products." He added that the company's market research shows that there will always be segmentation in the market, with some customers demanding the look and functionality of the Tungsten.

"If you look at where the value has been for manufacturers, it's been in entry level devices," Linsalata said, and PalmOne hasn't yet shown it can get buyers to upgrade. "Whether PalmOne can take the entry-level Zire users up the upgrade path will be the challenge -- and it always has been."