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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Night Writer who wrote (91282)	5/15/2001 4:40:15 PM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

Compaq says handheld prices steady despite Palm cuts By Nicole Volpe and Franklin Paul NEW YORK, May 15 (Reuters) - While consumers are getting bargains on handheld computer devices after price cuts by market leaders Palm Inc. and Handspring Inc., corporate customers are still paying top dollar, executives and analysts said on Tuesday. Compaq Computer Corp.,(NYSE:CPQ - news) which sells its handheld Pocket PC device mostly to corporations for use by mobile workers, is unable to fill orders fast enough, and has even been able to raise prices, one Compaq executive said. ``The iPaq Pocket PC, the sales continue to be phenomenal,'' said Jeri Callaway, who heads up Compaq's corporate access business. "The orders are coming in still at a very significant rate. We still do have a sizable backlog, so we can't even fulfill all the orders we have on the books right now." ``We've not yet had to lower the prices, we've actually been able to raise the prices,'' she added. ``We've not yet had to lower prices to continue taking orders at a very significant rate.'' By contrast, Palm, the largest maker of personal digital assistants, said on Monday it slashed the price of its wireless model to $99, after a rebate, from $299. The move came as Palm contends with a glut of older models as it looks to introduce sleeker and more powerful versions. Handspring has characterized its cuts as a competitive response to Palm's inventory issues. Both companies continue to sell their high-end models for $400 and higher. Analysts pointed out that Compaq's share of both the corporate and overall PDA market, is still slim at best. According to market research firm NPD Intelect, Palm had a 65 percent share of the U.S. market in unit terms in March -- the latest month for which data is available, compared with 17 percent for Handspring and 2 percent for Compaq. PRICE NOT THE ONLY FACTOR FOR CORPORATIONS In addition, in a November-December 2000 corporate survey by Prudential Securities, Palm was found to be the ``clear leader in the handheld space,'' with a 45 percent stake. Still, Compaq, whose high-end iPaq models sell for about $600 and higher, said they see a lot of benefit from the business, which is able to bring in higher margins as the company keeps its inventories of handhelds low. SG Cowen analyst Rob Stone said that while competition in the consumer-oriented handheld market remained fierce as the companies try to work off inventory, such price cuts were not likely to change corporate buying decisions. He said, for instance, the price changes would not shift demand away from Canada's Research In Motion Ltd.(NasdaqNM:RIMM - news) -- whose ``always on'' devices allow messages to be typed out on a tiny keyboard and then sent wirelessly as e-mail. Also known as the Blackberry, which is the name of its software, the RIM device is largely used by mobile workers. ``The decision that a corporate buyer has to make encompasses a number of things,'' said Stone. ``The cost of the client handheld device is only one of those.'' Many experts see the corporate market as a source of exponential growth in coming years, with corporate technology managers declaring the handhelds a standard tool in the office and purchasing hundreds or thousands for their staff. Stone adds that to them, price would likely lag behind other critical issues when determining which device to buy. ``The corporate buyer needs to assess the rest of the system, the back office support for the client, the cost of the software and whether the platform is one that will continue to support upgrades and new features desired in the future,'' he added. Market research firm IDC forecasts that the percentage of handheld computers shipped to companies in 2004 will rise to about 50 from 30 in 2001. IDC sees the total number of shipped products growing to 33.6 million in 2004, more than double the 2001 estimate of 14.9 million.