A Perfect Pair

In the past, marriages between wireless and PDAs weren't exactly made in heaven. Now they're in it for better.

You'd think they'd go together like peanut butter and jelly--wireless communications and PDAs. Who doesn't want to surf the Web or grab messages on the road?

But past attempts to slap these two together have attracted few diners. Was it the concept or the implementation? More like implementation and price, says Kevin Burden, an industry analyst for IDC in Framingham, Massachusetts.

Early adopters of wireless PDA ventures paid an extra $200 to $400 for wireless hardware and $40 to $50 per month for Web access--on top of charges from their phone carriers. What they got was info that, according to Burden, "you can find in any daily newspaper."

Nor has the idea of phoning home from a PDA rung any bells yet, despite favorable reviews for crossovers like Kyocera's Smartphone and Handspring's VisorPhone add-on. One problem is that most businesspeople prefer their Snickers-sized cell phones over anything with a decent-sized display and comfortable data input. Yes, you can phone service to your boxy PDA, but how do you use it in public without looking like a geek? And there's face grease, which can muck up your display.

Despite the challenges, proponents are looking past the obstacles to IDC's predictions that PDA sales will triple to 14.3 million by 2005. Companies like Handspring hope to get a slice of the $110 million in annual handset sales expected by then.

So, what has changed?

A Killer Instinct

For one thing, the so-called "killer app" for wireless PDAs has arrived. Analysts say the quick acceptance of Research in Motion's BlackBerry demonstrates the business value of wireless e-mail.

Mundane? Maybe, but addictive as well, says Peter Belman of Motient--BlackBerry's packet-data network provider--in Reston, Virginia. RIM's "thumbtyper" adds simplicity to portable e-mail by allowing you to maintain a faster pipeline to collegues that's more reliable than phone calls.

To pave the way, Motient will launch new wireless modems for Palm handhelds and Pocket PCs. Compaq just announced a similar device for iPAQ handhelds that includes a phone. And Palm is about to ship an integrated wireless PDA.

Likewise, network providers like AT&T, Cingular, Sprint and Verizon are building packet-data channels to bring Internet services and always-on e-mail to PDA and handset owners. They'll focus on the Palm OS, then other portable OSes, says Tole Hart, senior analyst for Dataquest/Gartner in Stamford, Connecticut. By 2003, they will cover about 90 percent of U.S. population centers. Hart expects the number of packet-data subscribers to skyrocket from 2.8 million in 2001 to 97.9 million by 2005.

Hart and Burden see ROI in those applications that transmit company information to mobile workers as well as applications for mobile industries. But for data mining or even Internet access to be of value, providers must do more than squish information into a PDA display as they did in the past, warns Burden.

Handspring's Treo 180 PDA/phone may be the best indication of how well PDAs and phone service go together. Issues like form factor and getting face oils on the display sunk the VisorPhone, say Handspring executives, but Treo is slimmer than most PDAs, and its earpiece is in a flip-up lid that keeps the screen away from your face. Treo's Palm functionality integrates well with its clear-sounding phone, and one of its four quick-launch buttons can be set to always-on e-mail.

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This article was originally published in the March 2002 print edition of Entrepreneur with the headline: A Perfect Pair.

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