The Palm platform still makes up 50 percent of the handheld market. But Microsoft’s Pocket PC operating system is gobbling up market share as the devices that run it fall in price. Palm’s challenge is to give its vast, loyal customer base a reason to upgrade from 1999’s Palm V, the first electronic organizer to stick the functions of the little black book into a lightweight machine with sleek curves.

The Tungsten T, unveiled last week, is essentially a Palm V on steroids: it sports an upgraded operating system, 16MB of memory instead of 8, a high-resolution color screen and a muscular processor that speedily renders graphics and records voice memos. But the coolest part is the design. The compact unit features a circular button that lets you control it with one hand, and the base slides down with a click to reveal the graffiti pad, on which you can enter data with the stylus.

For several reasons, though, the Tungsten T is difficult to recommend. One of its major selling points is compatibility with Bluetooth, a wireless technology that lets you use the Tungsten to, for example, remotely dial your mobile phone while it’s still in your pocket. But too few phones are currently Bluetooth-enabled. Then there’s the price. The Tungsten T will sell for $499. That’s a hefty price tag when there are so many other handhelds out there–including Palm’s own $99 Zire and a coming wave of sub-$300 Pocket PCs–that essentially do the same thing for less.