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Sony to Unveil No New Clies in U.S.

June 02, 2004|David Colker | Times Staff Writer

Sony Corp. said Tuesday that it would introduce no new models of its Clie hand-held computer in the United States this year, effectively killing a product line launched four years ago as a way to organize music, movies and photos on the go.

The electronics and entertainment giant denied it was abandoning the Clie -- or the 3.5 million customers who bought one -- but Todd Kort, analyst at technology research firm Gartner Inc., said Sony would probably let the device die quietly.

"They wanted to do it gently," Kort said, noting that the Clie is powered by the Palm operating system licensed by Sunnyvale, Calif.-based PalmSource Inc. "They have an equity stake in PalmSource and they didn't want to yank the rug from under them all at once."

Sony is the second-largest customer of PalmSource -- after PalmOne Inc., maker of Palm organizers. PalmOne and PalmSource was spun off last year from Palm Inc., which became PalmOne with its acquisition of rival Handspring Inc.

PalmSource shares fell $2.41, or nearly 12%, to $17.84 on Nasdaq. Sony dropped 22 cents, or less than 1%, to $36.65 on the New York Stock Exchange.

Sony would not disclose sales figures for Clie, which according to Gartner is the No. 3 line of organizers, behind models made by PalmOne and Hewlett-Packard Co. Kort said about 1.4 million Clie units, priced from about $200 to $600, were sold worldwide last year. For each unit sold, Sony paid PalmSource a licensing fee of about $5 to $10, depending on the model.

Nonetheless, David Limp, head of business development for PalmSource, said he was trying to take a "glass half full" attitude toward the news. He said PalmSource hoped to have a continuing relationship with Sony, which Kort said made nearly 20% of the personal digital assistants that use the Palm operating system.

"We will find other ways to do business with them," Limp said.

Sony executives would not discuss their decision, but said in a statement that the Tokyo-based company would continue to develop mobile devices as part of its joint venture with Ericsson. Sony Ericsson Mobile Communications Ltd. sells a high-end wireless telephone that is also a Clie-like personal data assistant.

The Clie was a victim of Sony's ventures into multimedia, Kort said. When it launched Clie in 2000, the company stressed the ability to play music, take pictures and show videos.

"That turned out to be a niche market -- less than 20% worldwide," Kort said.

People generally wanted less-expensive hand-helds that stuck to address book and planner functions that made the original Palm models so successful in the mid-1990s. Personal digital assistant shipments peaked in 2001, at 13.2 million units worldwide. They fell to 12.1 million in 2002 and to 11.5 million last year, according to Gartner.

"From 2001 to 2003, hand-held users upgraded from a monochrome screen to color or to get more memory, but that was it," Kort said. "People did go for the multimedia stuff -- like MP3 players -- but not on their hand-held."

Until Tuesday, Sony had been aggressive about introducing Clie models -- about 30 in all.

"I needed a Clie just to keep track of all the Clies," said technology analyst Richard Doherty of Envisioneering Group in Seaford, N.Y.

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