Published in The Australian, July 11 2002

READING the news on a handheld computer seems like a sensible idea. If you carry around a Palm Pilot and you're stuck on a train, why not catch up with the latest headlines?

While several companies have experimented with systems to enable that scenario, finding a profitable business model has proved something of a challenge, especially in Australia. Meanwhile, a recent slump in handheld sales threatens the very concept of news on a handheld. According to research firm IDC, handheld sales in Europe and the US have declined in the past year, although the Asia-Pacific market grew by 36.7 per cent to 2.91 million units in 2001.

The dominant provider of handheld content is AvantGo, which claims 4.5 million subscribers for its Mobile Internet Service worldwide.

AvantGo signs up media organisations and other businesses to provide content for the service, which is available free of charge for anyone with the appropriate hardware. Local providers using AvantGo include Fairfax, News Limited (publisher of The Australian) and Yahoo!, as well as some smaller publishers and some corporate customers, including Intel.

AvantGo effectively views the news service as a loss-leader promotion for its corporate software packages, which enable business information to be synchronised onto handhelds. The strategy is taking time to pay off; in 2001, AvantGo recorded a $US29.9 million ($53.3 million) loss.

Offering content for free can also cause complications. For instance, web-only publisher Salon offers basic free content through AvantGo. However, readers who have paid for its premium subscription service can't access those articles on their handheld, because there's no easy way to ensure only paid subscribers get access.

Other competitors in the handheld content space include Mazingo, which is promoting video content as well as text. Mazingo offers a mixture of free and subscription magazines. A handful of Australian companies are providing content for the service, including Leaders Recruitment and Beyond Productions. Unlike AvantGo, big-name Australian publishers are conspicuously absent, but NBC and USA Today in the US are offering content via Mazingo.

Hard data on the number of users of such services is hard to come by, but the entry barriers are low. All the Australian content available on AvantGo, for instance, is simply converted from existing email newsletter services, so no extra effort is required apart from developing an initial conversion filter.

Unlike email newsletters, portables lack a universal distribution medium.

Different software is required for users of systems based on the Palm and PocketPC operating systems (the dominant players in handheld computing).

With Palm accounting for more than 97 per cent of handheld software sales, some players have been reluctant to convert their software to PocketPC.

AvantGo was originally Palm-only, but now operates on both platforms.

Vindigo, a US-based service providing city guide information on handhelds, also made the conversion. However, it charges users of its PocketPC service, while Palm customers get the information for free on an advertising-supported system.

Other technical barriers to handheld news include the relatively poor quality of the screens on most handhelds. These can prove difficult to read even for text-only services, and few have the graphics or audio capacity to support effective Mazingo-style video broadcasts.

The expense of connecting via wireless networks to get the content is also an issue. Currently, local AvantGo users need to synchronise with their desktop PCs before setting off to ensure they have the latest headlines.

That scenario might change with the gradual introduction of 3G networks.

The biggest challenge remains making money from such services. Given the difficulty most publishers have making money even from well-trafficked web sites, moving that content onto other platforms is not high on the list of priorities.