Thus, it was all normal on the software part, but Palm’s hardware division rose to the occasion, too. They announced two new trademarks, Tungsten and Zire. One was to compete with PocketPC-devices in the high-end sector, while the second (it was that “sub-$100” thing) was to break into a new market for Palm. In fact, the Zire did it during the same fall already. Of course, this was a lightweight version, but let’s be fair. The company has never sold anything for such a price (except special orders). Pocket PC devices have never cost so low, either.

New hopes were in the air. At least, Palm’s share of the market got more or less fixed (41.7%) compared with Handspring’s drop from 22.5 to 6.6%. Considering Sony’s second place with 19.8%, the Palm camp looked most advantageous.

Of course, there were big troubles ahead. The PDA market itself was losing its momentum, even shrinking. The world’s sales volume in 2002 was 9%smaller than in 2001 equaling 12.1 million units in total. And that was not the end. Belts were pulled in once again. Palm fires 19% of the staff, which is about 200 people.

This appeared like a preparation for future battles. First of all, they changed the character recognition system. Xerox was accusing Palm of violating its patents on the handwrite text recognition technology called Unistroke. Actually, Xerox had been doing this since 1997, first suing U.S. Robotics, but now the appeals court in Washington agreed with it.

It meant that all Palm devices could be prohibited one day, all of themthat used the Graffiti technology, violating that patent. Moreover, the big PalmOS licensees (like Sony) would suffer, too. This was too serious a case and too hard to beat. That is why PalmSource licenses the text recognition technology called Jot from the California-based Communication Intelligence. Palm called it Graffiti 2. It was a real laugh of fate: the Graffiti technology was the keystone the original Palm was built on, but it turned to be the weakest chain in the end. Well, Jot had its advantages, too. It is more convenient and allows the user to enter characters in the natural way. Of course, Palm voiced this fact as the reason for the change in the platform.

Still, although Graffiti 2 is user-friendlier and doesn’t make the user learn a new alphabet, this is not the perfect solution. As I have already mentioned, the keyboard is often more convenient. So, Palm licenses the design of the keyboard from the competitors – from Research in Motion, the creators of the popular (in the USA) wireless messenger device BlackBerry (by the way, Handspring also buys the license from RiM, thus ending the patent quarrel with this company). Palm used the keyboard in the direct rival of the Treo – the Tungsten W communicator with an integrated GSM/GPRS modem. That was a nice thing with its color display (320x320 pixels resolution), an SD slot, but also with… PalmOS 4.1 and 33MHz Motorola DragonBall processor! The Tungsten T, released half a year earlier, ran PalmOS 5 and had a 144MHz ARM processor from TI.