Palm supply problems could hit Pocket PCs

Palm said a shortage of components is partly responsible for the low number of its handheld devices available in the shops, and analysts warn that Pocket PC makers could suffer similar problems.

Shortages of the company's devices, in particular the Palm IIIe, have even led to customers paying well above retail price for devices being sold on internet auction sites.

In a statement, Palm said that strong demand for the devices, coupled with an industry-wide component shortage had caused the problem. "We believe that growth in mobile phones - which use LCD screen displays just like ours - is one key factor impacting component supplies," the company said.

"Flash memory, which allows our customers to upgrade their Palm handhelds, is also in short supply across the computing industry. Our production has accelerated every quarter this year and we are shipping every day. Even so, there is still an imbalance between supply and demand. Among business problems, this is a good one to have," it added.

Palm said it is working with suppliers to lengthen purchase orders to improve access to components and adding suppliers to solve the problem, which it said should begin to abate soon.

The company said it believed it is not the only manufacturer to suffer from the shortages.

"It's widely known that many sectors of high technology are facing component shortages. Various articles and public statements have indicated that companies facing component challenges include Motorola, Cisco, Hewlett Packard, Solectron and Ericsson," said Palm.

Industry analysts warned that the component shortages are likely to hit companies manufacturing other handheld devices such as the Microsoft Pocket PC handheld PC launched in April by vendors including Hewlett Packard and Compaq.

Catherine Pennington, research analyst at IDC, said: "The reason why its is hitting Palm so badly is that they have such a huge market share. But this could hit Pocket PC devices too, there is definitely a shortage of LCD screens."