Handheld maker Handspring cut 20 percent of its work force, or about 80 employees, this week, CNET News.com has learned. Company spokesman Allen Bush said the cuts, which hit the marketing department hardest, are part of Handspring’s effort to trim costs and focus on its Treo line of wireless handhelds as opposed to its traditional, non-wireless organisers.

Insight

Handspring is struggling to compete in a smartphones market currently dominated by Nokia in Europe and Samsung in the US. Its Treo communicators, now the main focus of the business, are good products, but Handspring simply cannot afford to market them in the way Nokia and Samsung can. It also has limited access to the crucial operator distribution channels which shift real product volumes.

There are significant opportunities if it can establish itself early on as a player in the smartphones market, but these job cuts suggest that Handspring will struggle to stay the course. It has an innovative hardware design team, led by Joe Sipher and Jeff Hawkins, but without its own operating system or any real proprietary software assets, it may even struggle to find an acquisition partner. A Palm – Handspring merger has been mooted for some time, but it is hard to see how this would benefit either partner.