Wireless: Expected tech bright spot feels crunch

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Wireless services delivered via cell phones, two-way messaging devices, hand-held organizers/-personal digital assistants and even cell phone/hand-held combinations were supposed to be a bright spot in an otherwise anemic tech economy. But cut-throat competition, eroding margins and declining consumer spending have cast a pall on marketers struggling to rev sales, develop new software applications and create compelling service packages.

Industry insiders say marketers such as Hewlett-Packard Co., Palm and Sony Corp. will focus the majority of their efforts on customizing devices and software applications for businesses. Consumer hand-helds are unlikely to disappear but brand consolidation is sure to leave fewer models on store shelves and in cyberspace.

PALM FIGHTING TO HOLD SHARE

It's unclear whether HP's proposed acquisition of Compaq Computer Corp. means Compaq's iPaq hand-held brand remains alive. Meanwhile, Palm, which accounts for 69% of the retail hand-held market, is trying to hold on to share as it reorganizes, separating its operating system, software licensing and applications business from the hardware side of the business.

Both Palm and Handspring, the rival whose founders created the Palm operating system, are forging separate relationships with software applications providers to develop easy-to-use functions for consumer users, and mission-critical ones for enterprise users. Research in Motion's Blackberry two-way email pager, which has a small but loyal installed base of mobile professionals, is trying to drill deeper into the segment. It is enlisting support among developers to create new applications for business use.

While hand-held marketers attempt to develop new products, services and alliances, wireless service providers such as newly independent AT&T Wireless, Cingular Wireless and Verizon Wireless continue to shape their relatively new brands and explore service opportunities. Instant messaging capabilities and short-message delivery are key drivers for carriers. Each service provider is likely to work more closely than ever with handset marketers such as Nokia and Motorola as new service offerings are tested and deployed. Alliances, such as the one between Sony Electronics and Ericsson, are likely to increase as consolidation occurs.

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