PDA Wars: Round 2

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There are a few wild cards in the PDA market as well. Research in Motion has sold more than 700,000 of its BlackBerry wireless e-mail devices directly to corporations such as Goldman Sachs, Merrill Lynch and NBC. Jack Welch, Michael Dell and Al Gore are fans. This summer Sony's Palm-based Clie will get a snappy new upgrade, complete with a sharp color display and support for a new, secure digital music format. By leveraging resources from its music, gaming and audio-video divisions, Sony may be able to create the ultimate portable gadget. And now the first PDA phones are on sale from Kyocera and Ericsson, with more on the way from Microsoft, Motorola, Nokia and others.

Handspring's Dubinsky remains unfazed. "We're used to people saying, 'Oh, Sony's entering the market. It's over, pack your bags,'" she says. "But that hasn't happened." It's likely the market will become more segmented, with Microsoft and Research in Motion homing in on corporate users, Sony targeting upscale consumers, and Handspring and Palm attacking from all angles. But Palm still has the most to lose. "The onus is on Palm to continue to innovate in its design and operating system," says IDC's Slawsby. Let the hand-to-hand combat begin.