Handspring Starts U.S. Shipments Of Treo Handheld Phone

Handspring Inc.

Treo will be available from Handspring's Web site, with the first orders seen delivered by the end of February. The device will hit electronics retailers in March, the company said.

Available with either a built-in keyboard or handwriting recognition tablet, Treo will sell for about $400 with a new cellular activation, and $550 without.

Cingular Wireless and VoiceStream Wireless will offer mobile service for the device, which boasts 16 megabytes of memory, and can browse the Web, send and receive e-mail and other messages, as well as store contacts and appointments.

The release comes after the Mountain View, Calif.-based company last month warned a production glitch would delay Treo's debut. But in an interview, Greg Woock, the company's vice president of North American sales, shrugged off the issues as part of the growing pains in an innovative industry.

"With any new product there are going to be bumps in the road, and there are certainly those with this product, but we are working our way through it," he said. "This a real turning point for his category of communicator devices."

"COMMUNICATOR" DEVICES GROWING

Treo, which uses a wireless communications standard called global system for mobile communications, or GSM, most prevalent outside of the United States, was introduced earlier this month in Hong Kong and Singapore. The device is expected to debut in Europe later this month.

Analysts have anticipated the debuts of a throng of wireless devices, as handheld makers, having sold more than 20 million units in just over five years, seek growth in models that allow users to communicate, and not just store data.

But as young handheld makers such as market leader Palm Inc. and Handspring take bold leaps, players in the more mature, and much bigger mobile handset market -- where unit sales are closer to 1 billion -- are staging a roadblock by stuffing organizer capabilities into their existing models.

Treo, due later this year in color and enhanced wireless systems, is expected to be Handspring's only new product line in 2002, as it transitions from making static organizers to hybrid devices, also called "communicators."

"They are betting the farm on the communicator market, and as a result have a lot of challenges, because it opens up a new competitive landscape before them to face, namely Nokia," said Isaac Ro, an analyst with Boston-based Aberdeen Group.

Finland's Nokia, the world's No. 1 maker of mobile phones, has already captivated the European market with its communicator, nicknamed the "brick": the company plans to introduce the device in the United States this year.

"Nokia is not going to take this lying down," Ro said. "They are going to come out with something to respond. It will be interesting in the second half of the year to see how those two duel it out. "

TREO FOLLOWS DEBUT OF NEW WIRELESS PALM

The release comes a few week after Palm, the No. 1 maker of handheld devices and the software that powers them, unveiled its latest device, the i705, a computer organizer, aimed at corporate users, that can surf the Web, grab e-mail and communicate without wires.

The companies battled last year as they cut prices for their most popular handheld computers while suffering slower demand as the entire market cooled. They face tough competition for corporate buyers from Research In Motion Ltd., maker of the popular Blackberry device, as well as handhelds powered by Microsoft Corp.'s Pocket PC software.

Analysts opinions have been mixed about the potential for sales of communicators and "smart" phones in an economy where companies are tightening their belts and thinking more about how many employees to lay off rather than how many gadgets to buy.

As such, in a recent note to clients, analyst Paul Coster of J.P. Morgan Securities said that while Treo is attractive, its price is high.

Still, Aberdeen's Ro said there exists pent up demand for this kind of products from professional who must already carry several gadgets, and that he expects Handspring to sell more than 100,000 devices this calendar year.

"There are lots Wall Street guys and financial advisers who are running around with a bandoleer, including a phone and Palm, and they would love to consolidate all that onto one device," he said. "That market is going to be ready for the Treo."

Separately, Handspring also said it cut the price of its Visor Edge handheld to $199 from $249.

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