That’s what Palm was doing throughout the spring. There were other, external factors, too. For example, the announcement of the new top-end model, m505, had to be made in a hurry when the company was not at all ready for mass shipments of it. This was a reaction to Handspring’s announcement of its flat-screen Visor Edge, which directly threatened the sales of the Palm’s workhorse aka Vx, which was actually bringing in most money. Anyway, the spring model line from Palm was really impressive: the top-end m500, m505 and m515, the improved low-end m105 model and the mainstream m130…

At last, Palm found a modern alternative to the good old Vx, and with long-awaited expansion capabilities, into the bargain. This last feature even allowed competition with Handspring in the marketing field, because new models supported Secure Digital flash cards. Of course, this was not the only innovation. There appeared a new version of operating system (PalmOS 4.0), new batteries with longer life and so on. Top-end models even had a color display!

This meant reaching the next milestone and it was more than enough to answer to the Edge. The m105 model looked appealing, too (yeah, they were low-end, but more adequate than m100). The m130 model was one of the cheapest color-display PDA of that time (I don’t take into account the out-dated representatives of the Palm III family here).

Visor Edge

Of course, a single Visor Edge couldn’t compete with all the rivals, and Handspring reacted with a dramatic price cut throughout the spring. Palm, as I’ve mentioned already, had nothing to do, but follow the suit. For example, the m100 soon went down from the initial $400 to $330. I should also mention that the competitors tried to smooth down the effect of the price wars. Anyway, Palm was the winner of this round. By announcing the new models (the m505 became a new market hit) and cleaning up the distribution channel, the company regained up to 70% of the PDA market by the end of the spring. Handspring’s share dropped to 15%, though it was about 28% in the beginning of the spring.

Nevertheless, this couldn’t tell immediately on the company’s well-being. Other measures – like laying off about 10-15% of the staff (1500 full-time and 400 part-time employees) – couldn’t do it either. The effect would show quickly enough, but not immediately. And the current situation was most depressing, considering how rapidly the company was spending its not so big financial reserves. One of the analysts pointed out something like, “I’ve never seen anyone to go down from an excellent to such a depressing condition in six months only.” That was very characteristic. Moreover, there was the “dead” summer season right ahead.