Bargain Basement18 November 2002 Following the leads of Palm and Sony, several Pocket PC makers are primed to release low-cost handhelds. What does this mean for a stagnating industry? The new wave actually started with Sony, and the release of the Clié SL-10 and SJ-20. Both are hi-res monochrome PalmOS devices with card expansion, and both sell for less than $200. Palm one-upped - or is that "undered?" - Sony with the new Palm Zire m150, a 2MB, low-res, backlightless throwback to 1996 selling for $99 list, less on the street. These models manage to make the $499 Palm Tungsten T, while considerably more advanced, still seem somewhat overpriced. Before this holiday season, the Pocket PC market will see similar changes. Dell is set to release two beast handhelds that, while bulky, manage to pack XScale CPUs, 32-64MB RAM, CF and SD card slots, replaceable batteries and transflective screens at $199-299 after rebates. Super-slim Pocket PCs from ViewSonic and HP will sport transflective screens, 64MB RAM and SD expansion for $299. Even the Pocket PC Phone Edition can be seen on Amazon frequently as low as $250 with service activation. Microsoft and Samsung recently unveiled a reference design that could allow vendors to release monochrome Pocket PCs retailing for $100 or less. The trend - with the possible exception of Dell, which we'll examine in a bit - is clear. Devices are getting smaller, stripped down and much cheaper. Where did this trend towards bargain PDAs come from, and is it a healthy change for the handheld industry or an alarming warning sign? While mega-devices like the iPAQ 3975 and the Clié NR/NX series have been popular with the geek set, they're priced out of range of "normal" consumers. One of the big reasons behind slumping sales numbers in handheld sales recently is that most people that are going to spend $350 or more on a handheld already have one. The market had begun to rely on existing users upgrading rather than bring in "new blood." It's hard to grow a market selling to the same people over and over again. Worse, when geeks upgrade they often as not pass their old devices on to friends and family, further shrinking the potential market of new PDA buyers. Not surprisingly given their consumer electronics background, Sony saw this and was the first to act on it. While their high-end N* series continues to push the limits of what can be done with PalmOS to draw the geek set, their low-end S* series has gotten even smaller and cheaper while borrowing some features pioneered in more expensive high-end models. While an NX-70 or Tungsten T would be out of the question for a Christmas present for my roommate's 8-year-old daughter, a Clié SL-10 might be a good way for her to play the occasional game, read ebooks and keep track of school assignments. That's why small, cheap PDAs are such a big deal. In a market where the tech freaks and early adopters have already paid $500 for their devices, sub-$300 PDAs may be the only way to reach consumers that might otherwise have not considered buying a PDA at all. Remember the "gateway drug" theory, that cheap and relatively mild illegal drugs like marijuana inevitably led to harder drug abuse like heroin and cocaine? Many PDA makers are betting a similar pattern will play out for handhelds. Palm desperately needs to believe that today's Zire purchaser is next year's Tungsten buyer. But does that really make sense? Yes and no. On the one hand, low price models do expand the market, in theory making future customers out of people that wouldn't otherwise be considering PDAs. On the other hand, the new $299 - $299 being the "sweet spot" for American consumers, the most expensive price point without significant purchasing hesitation on buyer's remorse - Pocket PCs from HP, ViewSonic and Dell all offer 64MB RAM, great screens and SD expansion. Basically the same salient features as the recently $600 iPAQ 3950. How likely are owners of these devices going to be to upgrade at all? That depends, but it's not hard to see where the push to upgrade will come from. HP has already tipped their hand with the iPAQ 5450. This high-end, high-priced monster with feature a beefy battery, Bluetooth and WiFi integrated into the familiar iPAQ from factor. And here we see the two things the bargain PDAs are missing. The ViewSonic V35 and the iPAQ 1910 both feature anemic 900 mAH batteries, and little or no capacity for wireless networking. (The V35 is SDIO compliant, so you could use a Bluetooth SD card with it, but doing so precludes using a memory card.) I've said recently that unconnected devices are dead-ends. That's true for mobile professionals. Moreover, the PDA makers are counting on it. They may hook you with a low-end, unconnected device, but they're betting you'll upgrade later to a Bluetooth-equipped iPAQ 5450 or Tungsten T, a WiFi-friendly Toshiba e740 or Clié NX, or a convergent PDA phone like the XDA, Treo or Tungsten W. As in the PC and server markets before, the wild card here is Dell. The Dell Axim X5 is just cheap as anyone else's low-end models, but it can easily accommodate an SD memory card along with either a Bluetooth, GSM/GPRS or WiFi CF card, and the battery can be replaced with a 3,400 mAH behemoth if you really need the juice. It's not as thin and sleek as other low-cost PDAs, but it's not as likely to be outgrown and replaced, either. Will that combination of low cost and high functionality be all Dell needs to capture a third or so of the market? Dell thinks so. We'll have to wait and see if they're right. In any case, the next year promises to be an exciting one in the PDA space. Pocketable computers are poised to finally break into the mainstream market, looking to become as ubiquitous as - or maybe just merging with - cell phones. PDAs: they're not just for mobile professionals anymore. Jeff Kirvin
Jeff Kirvin is available for consulting on mobile technology. Email me today! |