Handspring homes in on midrange

Summary:Handspring plans to release two new handhelds into the increasingly crowded midlevel market, ZDNet News has learned. The move comes amidst similar activity from rivals such as Palm.

Handspring plans to announce on Monday a pair of handhelds aimed at the increasingly crowded midrange market, sources tell ZDNet News.

One device will replace the $199 Handspring Visor Deluxe, and the other will be the successor to the $249 Visor Platinum. Both of the new handhelds will offer minor improvements to the existing units, such as faster processors and more memory.

Company representatives would not comment.

Handspring's new products come amid similar activity from rivals such as Palm and Compaq Computer.

Palm is expected to announce on Aug. 24 a new midrange device called the m125, which will cost $250. Meanwhile, Compaq's monochrome iPaq H3135 now sells at some retailers for $199 plus a $50 rebate. The same iPaq device once sold for nearly twice as much.

The iPaq device uses Microsoft's Pocket PC operating system, while Palm and Handspring both use the Palm OS.

NPD Intelect analyst Stephen Baker said the midrange is a key part of the handheld market and accounted for roughly one-third of retail sales during the past three years.

However, the question underlying the midrange market--handhelds that cost roughly $150 to $250--is whether it is still ripe for sales.

Kevin Burden, an analyst at market researcher IDC, cautioned that the midrange market is getting more crowded, with scaled-down versions of high-end devices meeting souped-up low-end models.

The midrange has traditionally been a lucrative segment for manufacturers. Lower-cost devices tend to ship in greater numbers because more consumers can afford them. However, IDC indicates that it is a tough time to compete in the midrange market because sales have been slow.

This has not prevented manufacturers from entering this market as they look for new opportunities. Consumer-electronics giant Sony, which has been known for offering premium products, jumped into the midrange market this summer after witnessing the success of lower-priced models such as the Handspring Visor Deluxe and Palm m100. In late June, Sony introduced the $200 Clie PEG-S320.

There is also the danger that if the midrange options are too attractive, few buyers will spring for high-end models.

Burden said Palm, for example, faces challenges in adding the m125 to its lineup.

"Product transitions are always tricky, and it's particularly tricky when you have a lot of inventory," Burden said. "There are plenty of Vx's that are still out there."

Palm had a number of problems earlier this year when it announced the high-end m500 and m505 models long before they were ready and then faced a slump in sales of its existing products.

Burden said Palm would be better off retiring the slim, top-selling Vx before introducing any new model. Otherwise, he said, consumers will be forced to choose between a new, but slightly thicker model that is expandable or an older model that is more physically attractive. Too many might choose the latter, Burden said.

"A lot of users don't understand what expandability is all about, particularly the users they are going after: consumers," Burden said.

In replacing the Deluxe, Handspring is discarding its best-selling model, which was one of the company's first two products when it was introduced in April 2000. The Platinum, which was introduced in October, is the company's third most popular model, behind the Deluxe and the basic Visor, according to retail sales figures from NPD.

Palm has also enjoyed its greatest sales in this midrange of the market. The Palm Vx has been the company's best seller over the past three years, while the now discontinued IIIxe was the second most popular model on retail shelves, Baker said.

However, Baker questioned the timing of Palm and Handspring's product introductions, noting that they will likely miss the back-to-school season but come well ahead of the holiday-buying season.

"You would think that an aggressively priced product, especially in that range, would be attractive to the back-to-school market," Baker said. "You would think you would want to get that out in late July or early August." Handspring plans to announce on Monday a pair of handhelds aimed at the increasingly crowded midrange market, sources tell ZDNet News.

One device will replace the $199 Handspring Visor Deluxe, and the other will be the successor to the $249 Visor Platinum. Both of the new handhelds will offer minor improvements to the existing units, such as faster processors and more memory.

Company representatives would not comment.

Handspring's new products come amid similar activity from rivals such as Palm and Compaq Computer.

Palm is expected to announce on Aug. 24 a new midrange device called the m125, which will cost $250. Meanwhile, Compaq's monochrome iPaq H3135 now sells at some retailers for $199 plus a $50 rebate. The same iPaq device once sold for nearly twice as much.

The iPaq device uses Microsoft's Pocket PC operating system, while Palm and Handspring both use the Palm OS.

NPD Intelect analyst Stephen Baker said the midrange is a key part of the handheld market and accounted for roughly one-third of retail sales during the past three years.

However, the question underlying the midrange market--handhelds that cost roughly $150 to $250--is whether it is still ripe for sales.

Kevin Burden, an analyst at market researcher IDC, cautioned that the midrange market is getting more crowded, with scaled-down versions of high-end devices meeting souped-up low-end models.

The midrange has traditionally been a lucrative segment for manufacturers. Lower-cost devices tend to ship in greater numbers because more consumers can afford them. However, IDC indicates that it is a tough time to compete in the midrange market because sales have been slow.

This has not prevented manufacturers from entering this market as they look for new opportunities. Consumer-electronics giant Sony, which has been known for offering premium products, jumped into the midrange market this summer after witnessing the success of lower-priced models such as the Handspring Visor Deluxe and Palm m100. In late June, Sony introduced the $200 Clie PEG-S320.

There is also the danger that if the midrange options are too attractive, few buyers will spring for high-end models.

Burden said Palm, for example, faces challenges in adding the m125 to its lineup.

"Product transitions are always tricky, and it's particularly tricky when you have a lot of inventory," Burden said. "There are plenty of Vx's that are still out there."

Palm had a number of problems earlier this year when it announced the high-end m500 and m505 models long before they were ready and then faced a slump in sales of its existing products.

Burden said Palm would be better off retiring the slim, top-selling Vx before introducing any new model. Otherwise, he said, consumers will be forced to choose between a new, but slightly thicker model that is expandable or an older model that is more physically attractive. Too many might choose the latter, Burden said.

"A lot of users don't understand what expandability is all about, particularly the users they are going after: consumers," Burden said.

In replacing the Deluxe, Handspring is discarding its best-selling model, which was one of the company's first two products when it was introduced in April 2000. The Platinum, which was introduced in October, is the company's third most popular model, behind the Deluxe and the basic Visor, according to retail sales figures from NPD.

Palm has also enjoyed its greatest sales in this midrange of the market. The Palm Vx has been the company's best seller over the past three years, while the now discontinued IIIxe was the second most popular model on retail shelves, Baker said.

However, Baker questioned the timing of Palm and Handspring's product introductions, noting that they will likely miss the back-to-school season but come well ahead of the holiday-buying season.

"You would think that an aggressively priced product, especially in that range, would be attractive to the back-to-school market," Baker said. "You would think you would want to get that out in late July or early August."

Topics: Hardware

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