Palm today announced its two new professional-grade Tungsten PDAs, introducing phone features and built-in Bluetooth support.

Palm's Tungsten products are part of its strategy to realign its products, offering separate lines for consumers and professional users. The company released its Zire range of consumer PDAs earlier this month.

The Tungsten T is ultra compact because it has a retractable Graffiti pad for data input. US price is $499. UK pricing will be announced at a launch event today.

The Tungsten W supports GSM (Global System for Mobile Communications) and GPRS (General Packet Radio Service) to make voice calls and send and receive e-mail. The device will be available in the first quarter of 2003. It costs $549.

Both devices feature Palm's new five-way navigation dial, 320-x-320 pixel, 16-bit colour displays, 16MB RAM and a Secure Digital drive.

They also integrate Bluetooth support. Used with a Bluetooth-enabled mobile phone, users can browse the Web, send and receive email and dial a phone number directly from the address book.

The Tungsten T uses Palm OS 5 on an ARM chip. This runs Texas Instrument's OMAP (Open Multimedia Applications Platform) 1510 chip, a 144MHz processor, which promises better audio and video support, the company said. The Tungsten W hosts a Motorola DragonBall 33MHz microprocessor.

A Palm source explained: "The focus in development was really on getting wireless connectivity and the application suite right with the Tungsten W," defending the company's decision not to use Palm OS 5 and the ARM chip architecture for the voice-and-data PDA. He noted that nearly 20 per cent of all Palm OS applications still don't support the new operating system.

The Tungsten line may face stiff competition from a growing number of handheld makers preparing new models for the holiday shopping season, said Gartner principal analyst Todd Kort.

Handspring has been slashing product prices, while both Dell and ViewSonic are preparing to launch their own handheld devices in the US – based on Microsoft's Pocket PC operating system, the companies hope to launch products at around $249.

"With a $500 price point, I think Tungsten is in trouble," Kort said. "Dell is going to reset the market expectations for PDA pricing.

"Tungsten was conceived during a time when Dell's entry was not anticipated," he said.