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After a series of mishaps and less than stellar earnings, Palm is making some aggressive moves to turn its business around.
The PDA maker has introduced a new multimedia handheld, with a PDA to follow in May, and has greatly expanded the memory capabilities of its operating system.
Palm, the world's largest handheld computer maker with 39 percent of the market, has seen its lead slowly erode thanks to Microsoft-powered handhelds and Sony's elegant fold-up PDAs.
In the last two years, the handheld maker has survived financial losses and changes in both structure and managerial staff. Palm has downsized its work force and faced increased competition for a decreasing number of customers willing to make high-tech purchases.
At one point, analysts worried aloud whether Palm would be around long enough to witness the market's turnaround.
But analysts agree that Palm's latest entrant in the handheld market, the Zire 71, has the potential to help the company regain lost ground.
The Zire 71 is a $300 handheld computer with a built-in digital camera and extensive multimedia capabilities that industry analysts predict will put Palm on par with its fiercest competitors -- Sony, Hewlett-Packard, Toshiba and Dell.
"(The Zire 71) is an impressive product, targeted at Sony," said Rob Enderle, an analyst with market research firm Giga Information Group.
Analysts praised the handheld's elegance: It is slim, measuring 4.5 by 2.9 by .67 inches, and tips the scale at 5.3 ounces. It has a bright 320 by 320 transflective thin film transistor, or TFT, color display -- providing the best flat-panel display resolution on the market. The Zire 71 also comes with RealOne software to play MP3 tunes and a media player for video.
The device relies on Texas Instruments' OMAP310 processor, which improves the power efficiency of small multimedia devices.
Battery life is always a concern for multimedia handheld devices with TFT displays, but the Zire boasts a week's worth of battery life when the owner uses it for only half an hour a day. The rechargeable battery can handle about five hours of continuous multimedia use before fizzling out, said Anthony Armenta, a product manager at Palm.
Analysts also applauded Palm's recent move to expand its operating-system memory to be competitive with Microsoft-powered Pocket PCs, whose computing power and capacity have captured many frequent business users -- the ideal demographic in the PDA market.
In a recent lab experiment, Palm said it was able to extend its devices' memory from 16 MB to 128 MB, which is twice as much memory as most Pocket PCs by Dell, Toshiba and HP.
"When Pocket PC became available, it supported 32 and 64 megabytes of memory," said Alex Slawsby, an analyst with market research company IDC. "(Palm) is admitting that only now can it address more than 16 (megabytes)."
In early May, Palm will also introduce the Tungsten C, a Wi-Fi PDA with 64 MB of memory, aimed at "campus-based professionals on the move all day," Palm said.
But some analysts wonder if the Tungsten C offers too little, too late.
Many IT departments that were once open to buying their employees PDAs to increase worker productivity have since shut their doors. Most business travelers already have high-end PDAs, analysts said.
While Enderle adored the Zire 71, he expressed concern that the Tungsten C's Wi-Fi coverage, which is only available in limited locations, would not appeal to business travelers as much as a Blackberry device, which has consistent nationwide coverage.
"The problem with the keyboard-based PDAs is that they really do require a wireless e-mail backend which is robust, like what the Blackberry has," Enderle said.
"(The Tungsten C) is nice-looking, but it's expensive," he said.
Enderle pointed out that in a recession, a $500 PDA is less enticing than, say, a notebook computer, which is also mobile and has more capabilities -- especially nowadays, Enderle said, when "you can go to Wal-Mart and get a notebook computer for $799."
But Todd Kort, an analyst with market research firm Gartner Dataquest, said that Palm for the first time in the last three years has "come up with compelling new products that any PDA vendor would be proud of. I expect these new Palms to be very successful."
"I wouldn't predict that the new models are going to stop the erosion of Palm's enterprise market share, but I think that Palm is much more credible than it was six months ago in the enterprise space," Kort said.
