Palm's New Push Is Toward the High End

Handheld computer company Palm(PALMD Quote) plans to unveil two next-generation devices Monday, hoping to set the new gold standard in executive toys.

With price tags starting around $500, the two new devices -- the Bluetooth-enabled Tungsten T, and a wireless-capable Tungsten W -- are aimed at recapturing the higher-end business and enterprise market. It's a sales territory the company has ceded in recent years to competitors including Research In Motion(RIMM Quote), Hewlett-Packard(HPQ Quote) and Sony(SNE Quote).

The launch comes just two weeks after Palm introduced the lowest-priced handheld in its history, the $99 Zire. The Zire was designed to reach a market of first-time buyers.

The current generation of devices represent the final leg in the company's one-year turnaround plan. The plan was launched after Palm -- the company that made handheld computers a household name -- stumbled on product delays and corporate mismanagement late last year, which eventually led to the resignation of its former chief executive, Carl Yankowski, last November.

Palm is looking to these devices to help it weather the slowdown in corporate information-technology spending and overall uncertainty in consumer spending.

"We believe the pending release of its two new enterprise hardware products, the company nearing operational break-even and its analyst day on Oct. 28 should serve as positive catalysts for shares of Palm," said U.S. Bancorp Piper Jaffray analyst Bill Crawford. Crawford's firm has done banking for Palm.

Bluewater Capital analyst Brian Blair agrees. While "I still hold my opinion that investors want to see some sell-through," he said, "the initial reaction will be [one of] some excitement." Bluewater has no position in Palm.

The Tungsten T, a compact device sheathed in anodized aluminum, will bring music and videos to Palm-manufactured gadgets. The Tungsten T will run on a new higher-speed microprocessor developed by Texas Instruments and Palm's highly anticipated new operating system software, OS5.

It also will be built with Bluetooth capability, which allows the device to connect wirelessly to Bluetooth-enabled mobile phones and computers, in order to establish an Internet connection.

"For a segment of the market, size really matters," said Palm senior director of product management, David Christopher. Palm puts the price tag for the handheld at $499.