In addition, while it continues to ship the most PDAs, Microsoft and its various mobile operating systems as well as licensees such as Hewlett-Packard, in addition to fellow Palm OS licensee Sony, have taken a considerable dent out of palmOne's market share.

With all this going on, a year and half ago, palmOne split its handheld lines into two distinct sub-brands, Zire for consumer orientated users and Tungsten for professional and enterprise users. A bit unexpectedly, the Zire line took off with the original $99 entry-level model, becoming the fastest selling handheld in history.

According to palmOne, if you combine the sales of that model with the media-rich and $299 Zire 71, which features, audio, video and photo capabilities, the company has sold over 3 million Zire subrand handhelds.

With Zire, the goal for palmOne was to draw a whole new category of user into the world of handhelds, including students, families and seniors. And as far as palmOne is concerned this strategy has worked out in spades. Todd Bradley, palmOne president and CEO, said "Zire products are attracting new customers to the handheld category, increasing the palmOne market share, contributing to our handheld revenue and establishing a customer base for an upgrade business. And they've enabled palmOne to expand its sales channels worldwide."

The original Zire handheld sold more than 1 million units in the first seven months alone. It attracted more than 70 percent new users to handheld category, and more than 50 percent were women, according to palmOne research. In addition, 90 percent of the early buyers said they were not very tech-savvy, but price-conscious.

The Zire 71 handheld attracted nearly 40 percent new users to palmOne and was the No. 1 selling PDA in the United States until the introduction of palmOne's Tungsten E handheld last October. The Zire 71’s multimedia capabilities are appealing to younger consumers and women.

Last year, handhelds from palmOne took 39 percent of the worldwide PDA market, according to IDC. During the last quarter of 2003, handhelds from palmOne led U.S. sales with 57 percent of sales across all channels, according to NPD Techworld.