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Dell formally introduced three versions of the new Axim X3 personal digital assistant Wednesday, including a model with an integrated 802.11b wireless chip that costs less than comparable Pocket PC devices.

For $379, Dell will sell the Axim X3 with a 400-MHz XScale processor from Intel, 64MB of RAM, 64MB of ROM, and an 802.11b chip. The specifications had been revealed on the U.S. Federal Communications Commission's Web site two weeks ago, but Dell announced the pricing information for the first time Wednesday.

Cutting Costs

Hewlett-Packard's cheapest iPaq PDA with integrated 802.11b wireless costs $449. The Wi-Fi enabled iPaq h4150, introduced Monday, also comes with Bluetooth connectivity, unlike the Axim X3. It comes with 64MB of RAM, but didn't specify how much ROM it will have. HP has two other models with the short-range Bluetooth standard that cost less than the h4150 available on its Web site.

Toshiba's e750 Pocket PC comes with an integrated 802.11b chip for $399, but comes with only 32MB of ROM. Market leader Palm sells the Tungsten C with integrated Wi-Fi for $499, but has cheaper Bluetooth models available in its Tungsten lineup.

Dell will eventually offer an Axim with Bluetooth capability, but hasn't yet seen enough demand in the U.S. for such a product, said Tony Bonadero, director of wireless product marketing for Dell, on a conference call with reporters Wednesday. Most of the demand for Bluetooth devices has come from Europe, he said.

But ignoring Bluetooth now could hurt PDA buyers in the future, if they plan to hang on to their devices for at least two years, said Todd Kort, an analyst with Gartner in San Jose, California. With more and more Bluetooth-equipped cellular phones coming onto the market, "people are going to be sorry if they didn't buy a PDA with Bluetooth," he said.

The linchpin of Dell's business model is delivering hardware at prices lower than the competition, and that trend is continuing in a market where the company has less experience than its competitors. Dell entered the PDA market last year with the launch of the first Axim X5 in two configurations for $199 and $299, below what its competitors were offering at the time.

The company shot to fourth place in terms of shipment market share across both Palm OS and Pocket PC operating systems, and was second behind HP in the Pocket PC category in the second-quarter, according to research from IDC.

PDA Problems

But the Axims were viewed initially as heavy and clunky, and Dell's transition to Microsoft's new Windows Mobile 2003 operating system was marked by a series of technical and public relations blunders.

The Round Rock, Texas, company promised to make a patch available for users who bought handhelds with faulty firmware after the launch of the new operating system in June. But it missed a series of self-imposed deadlines, and then was forced to pull the patch from an FTP site and replace it with a patch distributed via CD after some users hacked the patch to give themselves free upgrades from Pocket PC 2002 to Windows Mobile 2003.

The new Axims are slimmer and lighter than the X5 version, Dell said. The $229 version of the X3 has the same specifications as the $199 X5, with a 300-MHz XScale processor, 32MB of RAM, and 32MB of ROM, but comes in the smaller package and uses a USB cable to connect to a user's PC rather than the X5's cradle.

A $329 version of the X3 comes with a 400-MHz XScale processor, 64MB of RAM, and 64MB of ROM, but without any type of wireless connectivity built into the device.

All of the new models come with an SDIO (Secure Digital I/O) expansion slot, and a 3.5-inch transflective TFT LCD screen.

Dell will still offer the Axim X5 alongside the new X3 models, the company said.

Despite the X3's slimmed-down design, other PDA vendors offer more interesting and compelling models, Kort said.

"The biggest mistake Dell is making is they are paying zero attention to industrial design. They're sort of saying, 'We think the market is commoditizing, here's your generic PDA.' For a lot of people, these things are still fashion items," he said.