Buddy, can you spare a palm?

Supply shortages have plagued personal digital assistants for the past year. First Handspring failed to meet inventory demand last winter when it released the popular Palm OS-based Visor. Now Palm faces a supply crunch that's caused a decline in sales.

According to OneChannel.net, Palm's online sales were about 45 percent lower in the second quarter than in the first due to supply shortages and increased competition from Handspring. And Pocket PCs aren't immune: Since its release in June, the Compaq iPaq H3600 series Pocket PC also has been scarce on retail shelves.

The problem: PDAs are more popular than anticipated, but so are the mobile phones that use the same types of displays.

Back in June, Palm reported a shortage of the LCDs and flash memory that are also used in mobile phones, says Tom Haight, vice president of editorial content at OneChannel.net. "These shortages could be tied to the rise in cell phone sales."

Palm representatives confirm the company has had to vie with the makers of popular phones for the scarce displays.

"LCD screens are still in tight supply, but we're getting more," says Marlene Somsak, a spokesperson for Palm. "The shortage does reflect that cell phone sales are even higher than Palms."

The LCD shortage comes when demand for Palms is unexpectedly high.

"Demand is through the roof," Somsak says. "Although we're making more and selling more Palms than ever before, people are already thinking ahead for Christmas because they've heard about shortages."

OneChannel.net data shows that Palm's sales began to decline in April, and that the shortages persisted through July at the online retailers that OneChannel.net surveys.

Palm representatives contend you'll find more Palms on brick-and-mortar retail shelves than at online shops. But Onechannel.net reports otherwise.

"When we called around to find a Palm V at retailers here in Silicon Valley, none were to be had," Haight says. "You'd think if anywhere had them, it'd be around here" -the center of the high-tech industry and Palm's own headquarters.

When you do find a Palm, you'll pay more. OneChannel.net found that the average Palm price increased from $US249 in March to $323 at the end of July.

Despite the shortage of components, the PDA problem also seems to be the fault of poor market predictions. Both Handspring (maker of the Visor) and Compaq have produced too few devices.

"Retailers have gone through the roof ordering these products," says Trey Litel, a marketing manager for Compaq iPaq products. "Demand is outstripping supply."

Launched in April, Pocket PC is Microsoft's repackaging of the Windows CE operating system for palm-sized devices. Compaq may have been hesitant to produce too many new iPaq Pocket PC devices due to the poor performance of Windows CE-based Compaq Aeros. Along with Casio's Cassiopeia, Hewlett-Packard Jornadas, and other Windows CE devices, Aeros failed to make much of a dent in the Palm-dominated market.

Since its June release, however, the iPaq Pocket PC remains a hard find. Compaq attributes its slowness in increasing iPaq sales to component shortages, of which the dearth of displays is just one part.

"Definitely, if we had more components we could ramp up more quickly," says Nora Hahn, a Compaq spokesperson. "There is a worldwide need for thin-film transistor [active-matrix color LCD] displays and it's something we need as well," she adds.

Like Palm, Compaq promises it's working hard to make more devices.

As for scarce Palms, people are simply paying more to get one. OneChannel.net found that the average Palm price increased from $US249 at the beginning of the second quarter to $323 at the end of July.

Meanwhile, Palm recently released a new model, the $US149 m100. As with the new Pocket PCs, the m100's success could be determined by its availability.

"If you have new models and you can't get them into the market, it's going to be difficult to get word of mouth out there," Haight says.

Palm says it's doing all it can to produce enough of the m100s. "We expect it to be a popular product," Somsak says.

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Cameron Crouch

PC World
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