Flaws in 2 Pocket PCs May Cause a Glitch in Consumer Interest
Quality problems from two leading makers of hand-held computers could hinder industry-wide efforts to get a broad base of consumers to adopt the devices, analysts said Wednesday.
Personal digital assistant leader Palm Inc. this week acknowledged that the plastic cases of its latest model have a tendency to crack. Meanwhile, rival Hewlett-Packard Co. admitted that the color screen on its new Jornada 540 Series Pocket PC can display only a fraction of the hues that were originally promised.
Both companies are making moves to compensate affected customers for the mostly cosmetic defects, including offering free replacements. But the companies’ bigger concern could be the millions of people who have yet to buy a PDA at all.
“This kind of news does scare people,” said Rob Enderle, vice president of desktop and mobile technology for Giga Information Group in Santa Clara. “People that are spending $400 or $500 on something want to believe what they’re getting is something they can be proud of, not something they have to make excuses for.”
More than a dozen people who bought the Palm IIIc, the first Palm with a color screen, said they have found hairline cracks on the back of their devices. Santa Clara-based Palm introduced the IIIc in February with a color screen and a $449 price tag. The company is offering free replacements for cracked PDAs, even as shortages of chips and screens has slowed production of new units.
Hewlett-Packard discovered that its $499 Jornada devices can display only 4,000 shades of colors, not the 65,000 it initially promised. The Jornada’s screen was designed to be powered by 16-bit chips that can produce tens of thousands of colors. But “somewhere along the way,” one of those chips was replaced with a 12-bit chip that can handle only 4,000 color shades, said HP spokeswoman Cherie Britt.
Hewlett-Packard, which introduced the Jornada 540 series last month, has changed its product literature to reflect the device’s reduced capabilities.
The Palo Alto firm said that customers who have already made their purchases can return their Pocket PCs if they are “totally dissatisfied,” Britt said. “Most average users won’t notice the difference.”
Taken together, the two glitches represent “a temporary hiccup, and it will soon be forgotten,” said Patrick Callinan, an analyst with Forrester Research in Cambridge, Mass. But the negative buzz certainly won’t help Palm, Hewlett-Packard or competitors such as Compaq Computer Corp., Casio Computer Co. and Handspring Inc. reach out to potential customers already wary of the devices.
About 3 million people use PDAs, including 1.5 million in the U.S., Enderle said. But most of today’s users are so-called early adopters, and PDA makers are having trouble connecting with a broader base of consumers, mostly due to price. Though a few devices sell for $149, the most popular products cost at least $300.
“Income is a better predictor of [PDA] ownership than interest in technology,” said Callinan, whose firm has studied the technology buying habits of 100,000 North American households. “There’s still a bumpy adoption road ahead.”
Rival PDA makers were more sanguine. “People who are in the market to buy a hand held [computer device] will still be in the market to buy a hand held,” said Brian Jaquet, a spokesman for Handspring, the Mountain View, Calif., company whose devices use the Palm operating system. “They just may be a little more careful and do a little more research before making their buying decision.”
In Wednesday trading, Hewlett-Packard closed at $118.63, down $2.06 on the New York Stock Exchange. Shares of Palm dropped 63 cents to close at $21.69 in Nasdaq trading.
