I think a reason that Handspring has inflated stock value might be its most recent line, the Treo's--mainly the Treo 300. This is a sprint 3G voice and data compatable handset. It features a color 160x160 display, thumb keyboard, and includes the Blazer internet browser. It's a pretty nice phone, and I know that a lot of corporations are issuing them to employees, thousands at a time.
Palm makes nice PDA's...there's no question about that, but they don't have the edge on the market like Handspring does. The fact that they're essentially partnered with Sprint has to do wonders for sales.
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