Yesterday Sony unexpectedly announced that it was dropping development of its line of Clie handheld PDAs in the United States for the foreseeable future. It will continue to support existing customers and let existing stock sell out.

Analysts are warning that sales of conventional PDAs without built-in phones will nosedive soon, after being flat for the last two years. Devices built on Microsoft’s PocketPC system have now pulled even in sales with devices using the Palm OS, and Sony apparently decided it didn’t have a viable niche in the market.

For what it’s worth, I prefer PocketPC devices over Palms for three reasons:

– Fewer people have had syncing problems with PocketPCs in my experience. That might be because there are more Palms out there – but so far I’ve been able to cure syncing problems when I’ve run into them with Pocket PCs, while Palms have defeated me several times.

– PocketPCs are better integrated with Outlook. Palm traditionally relied on its Palm Desktop software, but that’s isolated from everything else on the computer – you can’t reach information there from your e-mail program or your word processor, for example. Palms can integrate with Outlook, of course, but it’s an afterthought, implemented poorly and a bit unnatural. The support for Outlook is built deeply into the Pocket PCs.

– And last, I just like the interface better on Pocket PCs. If you’re in the market, go to a store and compare the Palm and PocketPC devices before you buy!

So far, I’m unimpressed with the options to add wireless capabilities to Pocket PCs. It’s hard for me to imagine using a screen that size for serious work on e-mail or Internet browsing. If I were buying a PDA today, I’d get the Dell Axim X3 – the 400MHz version for $299.

An interesting angle on this is that Sony might be exiting the handheld business to catch a fundamental shift to cell phone/PDA hybrids. Existing “smart phones” are pretty disappointing, but Sony’s partnership with Ericsson may put appealing new phone-based products on the market at the same time that the cell phone providers finally figure out how to provide true broadband connections. The analysts believe the market is poised for that shift, leaving Palm and Microsoft in the dust.

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