Kaftner said the HP devices add features that Dell doesn't have and creates new market segments in the space.

Jupiter Research analyst Michael Gartenberg agreed. "HP still differentiates at the high end with devices that add 802.11b, Bluetooth, a universal remote and Biometric security but all that comes at a price," he said, adding that the real head-to-head competition will be in the low-end (consumer) market.

Dell's Axim X5

"HP has no intention of giving up any ground to Dell but in the early 90s, people also claimed that no one bought PCs through the mail and only bought at retail. Underestimating Dell's ability to execute would be a mistake for HP," Gartenberg warned.

Still, Dell's aggressive pricing ($50 rebates through the Christmas shopping season) sets pricing high-end Axim X5 at radical levels, much lower than comparable devices from competitors like Toshiba, Casio and newcomer Viewsonic.

In an industry where the same components and manufacturers are used to produce comparable PDAs, pricing usually sets apart the players and analysts expect Dell to make quick headway

"Dell's entry reflects the maturity of the PDA space. With the price point Dell is targeting, they are quickly shifting the battle for the hearts and minds of consumers to prices previously unheard for Pocket PC devices," Gartenberg noted.

While Dell's move certainly boosts the Pocket PC market, Gartenberg believes the rapid commoditization of the Pocket PC platform will make it difficult for vendors to differentiate their products" and still keep price points low.

The Axim X5 PDAs from the Texas-based Dell would include the usual calendar, e-mail and synchronization features and would also be able to record voice notes or listen to audio files. Applications like Pocket Outlook, Pocket Excel, Pocket Word and Pocket Internet Explorer would be available.