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Personal digital assistant makers are moving out of the kiddie pool.

Those making the handhelds at








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and the like have a challenge in 2002 unlike any year before.

No longer is it enough to make small, easy-to-use devices that allow consumers to compute on the go. This year requires an earnest effort to provide wireless communication for the masses, and with that to step out of a smaller market and into the depths of competition with leviathan mobile-phone companies in a monster market.

Handheld makers have known their future is in wireless for years. But how will they survive in a struggle against an R&D budget such as the $2.64 billion


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spent in 2001? (That number is comparable to Palm and Handspring's

market capitalizations added together.)

The answer, of course, is that device makers aren't looking to unseat Nokia but to grab a small part of a huge market. It's a much better fate than eking out an insignificant existence as a niche device, sitting on the sidelines with the


graphing calculator.


Handheld companies have already put on a furious show, just a few weeks into 2002. Handspring's

Treo, a combination PDA and phone, has begun shipping in smaller markets -- though the company announced it has had trouble securing enough components to power a larger rollout. Palm last week announced its long-awaited wireless email

device with Palm OS organizer capabilities, the i705 geared toward the corporate market Palm has long ogled.

Research in Motion


, the awkward cousin of the PDA lineup, announced it would add phone functionality to its beloved BlackBerry pager for

AT&T Wireless


, and expand its current BlackBerry deal with the British wireless carrier


from the U.K. to countries across Europe.

While the products are exciting, it's the prospect of providing serious alternatives to traditional mobile phones that should give investors the thrill. Handspring announced specifications for its first general packet radio service-capable phone before handset powerhouse Nokia did. BlackBerry is years ahead of phone makers when it comes to providing wireless data, and now Palm's got a jump on them, too.

Handspring will be expected to update its Treo, and Palm must come out with a device in 2002 that incorporates voice communication. Microsoft will do the same for Pocket PC-based devices, unveiling its Stinger project to bring calling to the Compaq iPaq, H-P Jornada and others in the middle of 2002.

Research in Motion will move from the Mobitex network that currently carries its BlackBerry traffic to GPRS networks that carry mobile-phone calls and messages. Not to mention the well-overdue refreshing of the Palm operating system is expected this fall and will include all the real-time functionality that wireless communication and multimedia need. In that sense, Palm and Microsoft have more control than the rest of the market, with the benefit and pressure of shaping the operating systems that run convergence devices. Investors got anxious in 2001, but in 2002, PDA companies will deliver.

And Don't Forget Nokia

Then again, so will Nokia. The Finnish mobile-phone market leader launches its hefty Communicator product in the $600 to $700 price range in the U.S. this spring, offering calling, email, a sizable screen and an organizer based on the Symbian operating system. Rivals






also have backed Symbian for incorporation in future smart phones.

But Gartner Dataquest analyst Todd Kort argues that just because something comes from Nokia doesn't mean it's a sure thing. He describes the Communicator as "very large. It's like a brick! And the list price is $799. But it's a pretty phenomenal product, with a very large and high-resolution display. There is an audience that will pay for that device, but I don't think that device will sell as well as the Treo."

So there's still time for the PDA sector to make waves. While Nokia dominates the mobile-phone industry, there are a handful of players from Motorola to


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that are still in the mix. Carriers are certainly not exclusive about the phones they offer, and the handheld makers have made encouraging partnership inroads to get their new devices to carrier customers.

Meanwhile, cheapie-handset makers have cropped up making bargain phones in Asia. Handheld makers, who sold 12 million units in 2001, would be more than happy with a small slice of a market that shipped 380 million devices in a down year during 2001.

Tish Williams' column takes a look at the people who make Silicon Valley tick. In keeping with TSC's editorial policy, she doesn't own or short individual stocks, although she does own stock options in She also doesn't invest in hedge funds or other private investment partnerships. She breathlessly awaits your feedback and invites you to send it to

Tish Williams.