The handheld market slumped this year. Prices are down, speed and usability are up, but not very many people are buying.

After a few buyouts and burnouts, Palm and Sony are the only companies still making handhelds based on the Palm operating system. Palm has sexy new models hitting the market. The Zire 21 is bland but only $99. The Tungsten E has a pretty color screen at $199, and the Tungsten T3 has a stunningly beautiful color screen and lots of other good stuff at $399. Sony also has some new models, although The New York Times dismissed them with a sniff when it wrote a love note about the new Palm lineup recently (free registration required).

Meanwhile Dell will announce some new models of its Axim lineup tomorrow, based on Microsoft’s PocketPC operating system. They’ll have a slim, lightweight unit with builtin 802.11b support for $379, and a couple of other cheaper models. Personally I prefer the interface of the PocketPC devices, although Palm has improved lately.

There are lots of combination phone/PDAs on the market, by the way, but nobody has gotten it right yet. It’s the holy grail but it might be impossible to achieve. Don’t put off purchasing a handheld to wait for one that includes a phone – you might be waiting a long time.

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