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Palm shortage drives up retail prices in Asia


June 28, 2000
Web posted at: 10:54 a.m. EDT (1454 GMT)

HONG KONG (IDG) -- Hong Kong retailers are reporting a growing shortage of Palm handheld devices, driving the prices of some models well above the recommended retail price as demand in the region continues to rise.

Shortages of Palm PDAs (personnel digital assistants) were first reported in the U.S. and Singapore, where a few remaining Palm units have been auctioned and traded online, and fetching bids above its suggested price.

"Customers are being turned away no matter where they go because most shops have run out of stock," said one retailer at Sham Shui Po, who sold his last Palm unit a few weeks ago. "Prices [of Palm devices] have shot up once word got out that shipments will be late getting into Hong Kong," he said.


Fortress, a major electrical retail chain in Hong Kong, told Computerworld Hong Kong, that supplies have been low for quite some time, and that it hasn't been able to restock to full levels.

Two of the most popular devices sold in Hong Kong, the color-screen Palm IIIc and Palm Vx, normally retail at HK$3,580 and HK$3,180, respectively, but some shops have sold units at up to HK$500 more than the suggested price, Computerworld Hong Kong discovered.

"It's not the first time that Palm products have been in short supply here," said Cara Liao, Palm Hong Kong's marketing manager for the Greater China region. "Although we set a recommended retail price for retailers, the price fluctuations [in the market] are dictated by the levels of supply and demand," said Liao.

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"Since we launched the Palm IIIc and Palm Vx in March, the response here has been so overwhelming that it's hard to predict demand on a week-by-week basis -- especially in a market like Hong Kong. But the shortage is really a global issue," said Liao.

According to Palm's director for Asia-Pacific Craig Will, the dearth of Palm devices worldwide is not particular to Hong Kong. The shortage, Will said, has been caused by a combination of "robust" demand and competition with cellular phones manufacturers for the same flash memory and LCD screen parts used to make Palm devices.

"Quite frankly, demand for [Palm devices] has exceeded our original forecast, and we're still in the process of catching up with [that] demand," said Will. "The fact that we share standard components with cellular phone also hasn't helped us to achieve manufacturing [outputs] to the levels we want," he added.

Despite component shortages, the company said it is continuing to scale its production, and that its supply chain should be noticeably improved as early as this quarter, said Will.

At the moment, two to three shipments of Palm products come into Hong Kong each month, but these shipments are not necessarily delivering the models most in demand, according to Will. He adds that shortages in Asia will be addressed quickly and in a non-discriminatory fashion.

"There's no rhyme or reason why Singapore, Hong Kong, Tokyo, or Korea should have a different supply situations. We are doing our best to adjust our key markets, and certainly, Hong Kong is one of them," said Will.

The number of handheld devices is expected to reach 36 million by 2003, according to IDC. And while Palm enjoys a 71 percent of the market, its chief competitor, Handspring, is not letting the grass grow under its feet.

Handspring's IPO last week saw shares jump as much as 40 percent in the its first day of trading.

"Handspring is doing an amazing job in terms of product and competitive differentiation," said a senior analyst at NPD Intelect, who declined to be named. "It's held and captivated an audience," he added.

Handspring makes the Visor PDA, which runs on the Palm operating system (OS). The device includes expansion slots that can add capability such as MP3 files or take digital pictures, the company said.

Handspring has made its debut in Japan, but intends to enter other Asian markets including Hong Kong this year once Palm localizes its PalmOS in those countries, the company said.

"It has been hinted that [the Handspring Visor] will arrive to Hong Kong this September," said Samuel Wu, product specialist at Synergy Hong Kong, an official distributor for TRGpro and Palm PDAs. "Going by reports from Japan and the U.S., the Handspring should give Palm a run for its money," he added.

Wu said the backlog of orders for Palm PDAs is growing by the day and that a new shipment won't arrive until at least the end of July.

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