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Palm, Sprint Link Up on Wireless Devices

The cross-marketing deal aims at a growing mobile Internet office.




Sprint PCS


are pushing the wireless Internet.

The companies said Thursday they will offer their respective customers the ability to access the wireless offerings of the other. That means that users of the products of both Palm, the largest maker of handheld devices worldwide and the originator of the operating system licensed by many rival devices, and Sprint PCS, one of the largest nationwide carriers in the U.S., can both take advantage of the personalized MyPalm portal and the Internet content of Sprint's Wireless Web.

To do that, users of Palm handhelds can attach the device to a Sprint PCS Internet-ready phone via a mobile Internet kit, available early this year. Later this year, "smartphones" made by




with the Palm OS, as well as a wireless modem for Palm handhelds, will offer the same features.

As the fallout from Wednesday's surprise Fed rate hike continued to ripple through the market, Sprint PCS was up 25% to $25.81 and Palm was up 5% to $29.31.

The two companies are betting that users will increasingly access the Internet via a wireless device and not a personal computer. The numbers bear that out.

Forrester Research

calculates that by 2003, more than 60% of all mobile computing devices will be wirelessly enabled. Sales of handhelds are also set to outpace sales of PCs for the first time this year.

"Palm has been working hard to position itself at the centerpoint of wireless data communications," says James Faucette of

Pacific Crest Securities

. He rates Palm a strong buy and his firm has done no underwriting for the company.

"It's valued like a wireless company," adds Todd Bernier, an analyst at

, which does not rate stocks or perform underwriting.

"The kinds of services they're offering through MyPalm are very compelling for cellular companies," Faucette explains. "The trouble that users have to go through to switch carriers has increased. This is a way for Sprint to reduce its churn

the percentage of users who drop the service and figure out more ways to charge you more money every month."

Palm may term Sprint its "preferred" partner, but the relationship is not an exclusive one. That means Palm could very well set up the same sort of arrangement with a competing carrier.

Already, Carl Yankowski, Palm's chief executive, said on a conference call that Palm is in talks with European wireless carriers to offer the same type of service.