Palm starts selling low-end Treo

Palm has started taking orders for its Treo 680 smartphone with hopes to attract first-time users

Palm began taking orders for its Treo 680 smartphone on Wednesday, hoping to expand from its core business customers to a larger market of casual, first-time users.

Palm is charging US$399 for the "unlocked" version of the phone, allowing users to subscribe to any carrier, and plans to begin shipping the phones shortly after Dec. 1. One carrier has already announced a plan for the phone -- Cingular Wireless will begin selling the Treo 680 for US$199 on Friday.

Palm hopes to attract a new demographic by designing the Treo 680 with an internal antenna, making it slimmer than previous models, and offering it in four colors, according to a statement by John Hartnett, Palm's senior vice president of global markets.

In another bid for those casual customers, Palm has moved beyond purely business functions, and will offer entertainment applications like the ability to show Flash-based movies such as those seen on the YouTube Web site, and to play MP3 songs through a 30-day trial of Yahoo Inc.'s mobile, digital music service.

New users might also appreciate the Google Maps function, which offers personalized driving directions or addresses for nearby restaurants. "Location-based services hold great promise in a wide variety of areas, such as helping friends find each other, helping advertisers more effectively target prospects, and even ensuring that no man ever has to stop for directions again," said Avi Greengart, principal analyst for mobile devices with Current Analysis.

As a phone, the Palm OS-based device operates on the GSM (Global System for Mobile Communications), GPRS (General Packet Radio Service) and EDGE (Enhanced Data Rates for GSM Evolution) networks.

Palm hopes the Treo 680 will help it to grow beyond its roots in the slow-growing PDA (personal digital assistant) market, and claim a greater share of the burgeoning smartphone industry. Smartphone shipments worldwide grew 75.5 percent to 34.7 million units in the first half of 2006, according to research firm Gartner Inc. In comparison, PDA sales grew only 5.7 percent to 7.4 million units.

North America is the only region where PDAs continue to outsell smartphones, so Palm hopes its new product has arrived in U.S. markets in time to catch a wave of people upgrading to the new technology.

With only 5 percent of the worldwide market for combined PDA and smartphone markets, Palm needs the Treo 680 to be a financial success in order to compete with its larger rivals. Nokia is the largest vendor, with 42 percent market share, followed by Research in Motion with 6.5 percent and Motorola with 5.3 percent, according to Gartner.

Posting strong sales through the holiday season will be crucial for that plan, as Gartner predicts smartphones sales will continue to rise, totaling 81 million for the full year of 2006. That growth will be fueled by a jump in consumer demand, focused on individual details like fashion and multimedia, according to a statement by Gartner analyst Roberta Cozza.

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Ben Ames

IDG News Service

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