Palm, the pioneer of the handheld computer, is reinventing itself again.
In a move industry observers are praising, the company will roll out a new line of redesigned products beginning with Zire, a personal digital assistant aimed at first-time buyers. Zire hits retail stores Monday.
The company plans to release two high-end PDAs later in the year.
Unlike the company's earlier entry-level products, the m100 and m105, the Zire with its monochrome screen is white and svelte, tipping the scale at 3.9 ounces.
And while the m100 and m105 require two AAA batteries, the Zire gets power from a rechargeable lithium-ion battery and comes with an AC adapter.
David Christopher, senior director for product management at Palm, said Zire is geared toward people who use bulky paper planners and want to upgrade to a more portable digital organizer.
"For first-time buyers who haven't purchased a handheld, when people speak in pixels and downloads, their eyes glaze over and they opt out," Christopher said. "The Zire is fun, it's accessible and it's hip."
The Zire is also very basic.
Applications are limited to a calendar, to-do list, contact information, calculator and the ability to synchronize the handheld with a desktop computer. The only buttons on the device bring up the calendar and contacts. It does not feature a secure digital expansion slot like higher-end Palm handhelds do.
The device's packaging, which analysts hail as a selling point, is totally different from that of Palm's previous PDAs. Rather than display it in a box behind a locked glass case, Palm packaged the Zire in clear plastic blister wrap that will hang on a rack in the store like a pocket calculator.
The Zire retails for $99 at electronics stores like Best Buy and Circuit City as well as general retail stores Kmart and Target. It's the cheapest PDA running on the Palm operating system.
"It's a pretty cute little product," said Todd Kort, an analyst with Gartner Dataquest. "It will do well at that price."
While Kort says Palm has lost share in the high-end market to handhelds that run on Microsoft's Pocket PC 2002, the Zire will help Palm capture PDA users who may eventually upgrade to more expensive Palm products, he said.
While half the U.S. population owns a cell phone, only 8 percent of Americans own a PDA, according to Forrester Research.
Releasing a product like Zire, said Kort, "is probably something that Palm should have done a year ago."
But as evidence that the company is serious about capturing an untapped market, analysts point to Palm's latest decision to rename its product line.
In 1996, when Palm introduced its first consumer product, the series was named using Roman numerals: Palm III, Palm V and Palm VII. Last year, the company released new products as part of its high-tech m-series: the m125, the m130 and m515.
Now it's breaking up products under two lines: Zire or Tungsten, the name for the hard, corrosion-resistant metal.
Devices under the Tungsten brand will feature more powerful technology, and more bells and whistles, than the Zire. Consequently, they will cost more, too, Christopher said.
Analysts consider the change in branding strategy a good idea.
"It's absolutely the right thing to be doing," said Chris Shipley, a product analyst for IDG. "It has been difficult to make a buying decision, whether you are a consumer or an enterprise customer, and by rebranding and focusing on two distinct lines it becomes a lot clearer for customers to decide what is right for them."
Palm, which has been in financial turmoil since it spun off from wireless infrastructure provider 3Com 2-1/2 years ago, appears to be working aggressively to regroup.
Last week, the company's board of directors approved a 1-for-20 reverse stock split to boost the company's sagging stock price (PALM). Palm's stock has plummeted to under a dollar. It first sold for $100 per share in its March 2000 IPO.
Last month, following a series of reversals that included lawsuits, layoffs and CEO changes, the handheld maker was forced to offer refunds for the m130, which it admitted offered fewer colors than originally advertised. While he wouldn't say how many refunds they have had to fork over for the blunder, Christopher said it is a small number.
