Sony is scaling back its Clie handheld line and will bow out of the U.S. and European markets for PDAs

Sony is scaling back its Clie handheld line and will bow out of the U.S. and European markets for PDAs, and in so doing puts new pressure on operating system maker PalmSource. The consumer electronics giant, which entered the PDA (personal digital assistant) market in the United States with its Clie in August 2000, plans to continue to sell Clies in Japan. But it will wind down production and exit other geographic areas later this year, as it re-evaluates the handheld market, Sony spokeswoman Kelly Gaffney said Tuesday. Sony's decision comes as Palm is rapidly losing ground to Microsoft in the PDA market. In the first quarter of this year, market share for the Palm OS dropped more than 20 percent, according to research firm Gartner, with Palm and Windows CE each with about 40 percent of the market. Four years earlier, Windows CE had just 11 percent market share. The move is bound to create some upheaval in the handheld market, as Sony turns its attention to expanding its Vaio computer brand. Other companies, including Hewlett-Packard, Dell and PalmOne, are sure to fight it out for Sony's stake in PDAs. And PalmSource is left to figure out how to handle the loss of one of its largest customers for the Palm OS. Sony pledged to continue to support PalmSource, but analysts said that the software maker could take a revenue hit nonetheless. On the news, PalmSource shares declined 13 percent.