The Houston company hopes to do so by dramatically increasing the selection of add-on modules for the handheld. At this week's PC Expo trade show--part of Technology Exchange Week New York--Compaq showed off several upcoming expansion packs, including those for a cell phone, GPS (Global Positioning System) and Bluetooth wireless communication technology.
Compaq, not unlike competitors Palm and Handspring, is trying to create additional uses for its handhelds. Company executives hope that additional expansion capabilities will help create an effect similar to what Handspring accomplished with its Springboard expansion slot: drive sales by allowing its devices to be used in a number of new ways.
To that end, Compaq is trying to create a developer community similar to the "Palm Economy"--Palm's term for the companies that develop software, services and add-on modules for its handhelds.
Compaq offers three add-on sleeves for iPaq that allow owners to add extra memory, a wireless networking card, and other modules that fit into either a CompactFlash or PC Card slot. These products range in price from $40 to about $199. The new expansion packs, however, include other built-in features such as Bluetooth, which is a wireless networking technology that allows devices in a 30-foot range to transmit data between one another.
Cindy Box, marketing director of iPaq products, said wireless Internet access is the "most prevalent use" for current expansion packs.
Compaq itself is working on a Bluetooth expansion pack. The product, planned for release in the third quarter, will include both a Bluetooth radio and a CompactFlash slot for additional memory or to add on other devices. The price of the pack has not been determined.
Compaq is also developing a cell phone expansion pack for iPaq. The device, slated to ship in the fourth quarter, will operate on either traditional GSM (Global System for Mobile Communications) or newer GPRS (General Packet Radio Service) networks.
To use the phone, an iPaq owner will hold the device to his or her cheek with the screen facing outward. The phone will include features such as autodial from a Microsoft Outlook contact list and a headset. Battery life and the price for the device must still be determined, Compaq said. However, the company is aiming for the pack to cost about the same as a high-end wireless card, about $200 to $300.
IDC analyst Alex Slawsby said it's natural for Compaq to expand iPaq into wireless and voice communications because of the demands of its customers.
"This is a great way to improve on iPaq and to deliver the compelling voice add-on" for corporations that already use the handhelds and want to expand their functionality, he said.
In addition, he said, Bluetooth and cell phone options are important steps for Compaq to ward off competition, which includes Palm and Handspring on the consumer side, where customers are looking for products with integrated wireless and voice capabilities.
"The next big step for handheld makers is wireless," he said. The expansion packs are "a way to ensure iPaq continues to be a competitive product."
Wireless-enabled iPaqs are already being used in a number of industries, Box said. For example, some doctors use them to access patient medical records. And firefighters in California use them to help detail fire perimeters and assess damages, Box said.
"Think about carrying a laptop into some of these situations," Box said. "It's almost impossible."
Over time, a number of third-party expansion packs will become available. Some of them, which Compaq showed off at PC Expo, include:
A GPS expansion pack, called Pocket Co-pilot, from the New Zealand company Navman
A bar-code scanner from Symbol Technologies
"Silver Slider," a CompactFlash expansion pack that matches iPaq's silver case
The Mstation, a mobile point-of-sale terminal with a credit card reader that uses an iPaq and wireless technology to verify credit cards and then print a receipt
A second cell phone expansion pack using Code Division Multiple Access
The devices will ship in the next few months, the company said. Some of them, such as the cell phone pack, will be available outside North America.
Meanwhile, Compaq has made other efforts to nudge the iPaq along by committing to the handheld's current size.
Compaq will continue to produce iPaq models that are the same size as its current models through at least 2002, Box said. Maintaining the size will protect customers who put hundreds of dollars into expansion packs and will encourage companies to focus on developing new kinds of expansion packs.
Though it won't change the iPaq's size, Compaq will update the device's hardware and software and will offer better screens, faster processors and more memory, it said.
The iPaq is the best-selling handheld using Microsoft's Pocket PC operating system, which has been sold with more than 1 million units in about a year.
Compaq could have sold even more iPaqs if the company had been able to keep up with demand. Initially, the device was in short supply because of problems such as component shortages. The dearth resulted in some iPaq models being auctioned for twice their sticker price last year.
Compaq said it is now nearly caught up with demand.
"I think we'll be to the point where we meet demand sometime in the third quarter," Box said.