Handspring, which licenses the Palm operating system, has slashed the prices of all but one of its handheld personal digital assistants (PDAs).

The move marks an intensification of the price war with its rival, Palm Inc. It is also seen by industry pundits as a bid to head-off Microsoft-based devices, which have gained a foothold in the market.

Handspring's UK prices (inclusive of VAT) are as follows: the Visor Solo is down from £109 to £89; the Visor is now £119, down from £139; the Deluxe was £169, but now costs £149; the Platinum is down by £30, to £189; and the Edge was £329, but is now £269. The only price to remain unchanged is that of the Prism, which still costs £349.

The pricing shift is a reaction to Palm Inc's recent price cuts, which were designed to clear a huge inventory amid a shrinking market. Demand for PDAs fell markedly this year. Shipments of handhelds fell by 21 per cent in the second quarter of this year, compared with the preceding quarter, Gartner Dataquest, a leading market research company said. Shipments in the quarter totalled 2.8m units.

Palm is the market leader with 50 per cent, but lost significant market-share in the second quarter.

Compaq has also recently emerged as a strong PDA competitor, with its iPAQ handheld – based on a Microsoft operating system. Compaq doubled its share to 16 per cent of the market, from 8 per cent in the first quarter of 2001.

Handspring is in third place with 11 per cent of the market, a decline from 16 per cent in the first quarter of 2001.