3Com Enters Handheld Race

This week 3Com Corp. -- the No. 2 maker of networking products -- shipped its new, Internet-connected handheld PalmPilot ahead of schedule.

This comes only a few weeks after Microsoft (Nasdaq: MSFT) pumped $600 million into the publicly held Nextel, a digital phone company that has carved out a 3-million-strong niche in the business market. Its phones already offer such features as private paging and nationwide business networks. These networks allow businesses to connect by phone similar to an Internet newsgroup.

But soon, Microsoft plans to offer a potpourri of services including e-mail, news, sports and weather through Nextel's phones. Plus, there's also talk that stock quotes and travel directions could be part of the package. Calendar features from Microsoft's recently bought Jump Networks will also be transmitted on Nextel's tiny screen -- directly competing with 3Com's popular handheld organizer.

Preemptive Strike

If all goes well, 3Com will launch a similar package via a wireless Internet connection by early June to all those who purchase its new handheld organizer. Industry experts point out since 3Com has already captured 70 percent of the handheld computing market, its rush to market gives it a slight advantage over Microsoft.

To connect "Palm VII" to the Internet, 3Com is also launching its own Internet service called Palm.Net. The new handheld device will use a new technology called "Web clipping" which downloads only some of the data from a Web site-preventing graphics from crowding the Palm's small screen.

While no firm price has been set on the Palm VII, the price of $599 (US$) has been floated by company officials. But analysts say 3Com is waiting to see its competitors pricing before committing.

A Crowded Field

Microsoft is not the only competitor butting heads with 3Com in the handheld theater. Philips Electronics, NV and Casio Computer Co. are also racing to bring their own handheld gadgets to market within months.

Meanwhile, rumors are once again flying that 3Com is ripe for a takeover. According to an article in the May 24 issue of Business Week, Mike Murphy, editor of the California Technology Stock Letter, named phone maker Ericsson AB and telecommunications equipment maker Lucent Technologies as two possible suitors.

Perhaps the timing of 3Com's introduction of its new "PalmVII" is designed to sweeten the pot.

What do you think? Let's talk about it.