PDA prices plunge

by Reads (4,242)

If there’s anything good about a recession (yes, I used the "R" word) it’s that consumer prices typically fall. People stop buying things (i.e. demand decreases) and inventory starts piling up (i.e. supply increases). Sometimes the only course of action for a manufacturer is to reduce prices. The problem is, economic downturns also mean less disposable income. It’s all a vicious catch-22.

For handheld computer manufacturers, in particular, sales are slow and competition is fierce. But the kicker is that new models are just around the corner, which often serves to cannabalize sales of current models.

Take the Palm OS Handheld market, for example.

Sony redefined the price points in this market (and bucked its own history of premium prices for its consumer products) when it aggressively priced its newest CLIE handheld models–the color PEG-N610C at $399 and the PEG-S320 at $199. This forced Handspring to lower prices on several of its Visor handhelds, hoping to stimulate sales and clear inventory from the retail channel.

Handspring’s ultra-slim, monochrome Edge (which it now admits was "…a mistake") was cut from $399 to $299, which now appears to be the current mass-market cap for non-color handhelds. The Platinum was reduced to $199 to compete with the low-end CLIE, and the Deluxe and standard Visor were also cut by $30 and $20 respectively, in anticipation of being phased out in favor of upcoming new models.

Palm, which earlier this year slashed Palm Vx, VIIx and IIIc prices, has yet to react to this most recent wave of price cuts, and it now appears that several of Palm’s handheld models are selling for $50 more than comparable models from its competitors.

It’s not only the Palm OS handheld market that’s seen tremendous competitive pressure. Pocket PCs are dropping as well. Hewlett Packard Jornada Pocket PCs can be found for $229 from one online reseller, and Compaq and Casio have both offered mail-in rebates. Casio, which will discontinue its current EM-500 and E-125 Pocket PCs in favor of upcoming new models, recently offered a $100 mail-in rebate. Compaq has reduced prices as well as offered $50 mail-in rebates on both its iPAQ 3635 and 3135 Pocket PCs. And UR There dropped the price of its @migo Pocket PC by $100.

Bricks-and-mortar retailers are also trying to boost sagging sales of laptops and PDAs by offering their own in-store rebates. Best Buy recently offered a $100 instant savings on the Compaq iPAQ Pocket PC.

Does this make it a good time to buy a handheld computer?

Well, certainly great prices can be found. But there are also new models on the horizon, such as "always-on" wireless models from both Palm and Handspring aimed at the highly successful RIM Blackberry. Plus, there are new Pocket PCs from HP, Compaq and possibly a newcomer or two.

Our recommendation? Technology cycles are fast and furious, and it seems that as soon as your buy something there’s something bigger-and-better to replace it. But if it’s a personal purchase and you’re trying to get the most "bang for your buck," this might be your opportunity. However, if you’re looking for a business solution we recommend waiting two to three months for the new models.

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