This is a step in the right direction, but probably not enough to displace Palm from the driver's seat in that market.

Here are some features that will really take handhelds to the next level:

- Bluetooth. This low-power radio exchanges data with other Bluetooth-enabled devices within 10 meters. It will also act as an autodialer for your cell phone.

- Voice recognition. With a RISC processor and modest memory, basic voice recognition becomes possible in handhelds. This would make it easier to access phone numbers and directions while driving.

- GPS. With the cost of GPS chips dropping, this should be standard in most handhelds, allowing simple access to location-specific content such as maps and directions to nearby facilities.

- Expansion. Handspring has the right idea with its Visor. An expansion slot allows a simple base unit to be easily configured for a specific application. Add a 64M flash card and you have an MP3 player.

- Wireless Internet access. Already available on the high-end Palm VII, this will become standard. With Bluetooth and a cell phone, Internet access adds no extra hardware cost (just a monthly service charge, of course). For those without a Bluetooth-enabled cell phone, a wireless modem could be added via the expansion slot.

New processors such as StrongARM-2 can deliver the performance needed for these features without destroying battery life. Bluetooth will appear late this year, but it will take another year for its cost to drop. Flash-memory prices also need to fall from their current levels.

Given these constraints, it will be next year before a handheld with all of these features appears, and 2002 before these devices drop below $200. Palm's current 70 percent market share is impressive but meaningless in the long run, given how small the market is today. The device described above represents a quantum leap over any minor evolution of today's products. The company that delivers it will dominate a rapidly growing handheld market. Whether that company is Palm remains to be seen.

Linley Gwennap is the Founder and Principal Analyst of the Linley Group (www.linleygroup.com), a Technology Analysis Firm in Mountain View, Calif.