Sony Clie to Fade Away

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If only aging athletes, or certain hairdo-rock bands -- the kind that haunt the dirt-track and state-fair circuit -- had the same sense of style. Sony (NYSE: SNE) announced this week that it would exit the U.S. market for PDAs, even though it seems to be at the top of its game. Its Clie organizers captured about 13% of the market last year, making the firm the No. 3 PDA producer.

palmOne (Nasdaq: PLMO) stockholders might cheer the news, but shares of sibling PalmSource (Nasdaq: PSRC) dropped about 10% on the news. Sony's handhelds, which licensed the Palm OS from the latter firm, provided PalmSource's second-largest source of revenue.

Though the geeky schedulers in my family recently traded Palm organizers for a pair of color Clies, the circumstances of their purchase get to the heart of Sony's decision to exit the U.S. market. In short, we bought them at a big-box retailer; the decision was solely economic.

The Sony units offered more for the money. But the choice could just as easily have gone another way. The nifty Microsoft (Nasdaq: MSFT) OS handhelds from Hewlett-Packard (NYSE: HPQ) and Dell (Nasdaq: DELL) have been beckoning us for a while. Had we been interested in updating our communications gear at the same time, we very well might have jumped ship for one of the smart phones down the aisle.

In other words, competition is extremely tough, and the PDA as we know it is not likely to survive the decade as organizing functions become incorporated into a wider array of devices, like MP3 players, handtop PCs, or (hint, hint) future iterations of some of the amazing new portable gaming consoles like Nintendo's (Nasdaq: NTDOY) DS and the Sony PSP.

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Fool contributor Seth Jayson owns no company mentioned. View his Fool profile here.