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Here is the "most logical" reason for the price cuts:
clipped from http://www.pmn.co.uk/
Handspring cuts handheld prices
20 August 2001 -- Handspring has reduced the price of a number of its handheld computers in preparation for the 'back to school' selling season in the US.
Its entry level Handspring Visor will sell for $129 and the Visor Deluxe for $169, a reduction of $30. The Visor Platinum drops $50 to $199 and the Visor Edge, Handspring's latest product, will be reduced by $100 to $299. The price of the Visor Prism, which has a colour screen, remains unchanged. Handspring is targeting the reductions at the youth and educational markets, and will also cut the price of its GameFace joystick adapter to $24.95. The handheld market has come under increasing price pressure since Palm announced that it had accumalated $300m of excess inventory earlier this year. Since then both Handspring and Palm have cut prices across their ranges. The reductions have also fuelled speculation that Handspring is planning to introduce one or more new devices in the near future.
"Handspring continues to provide quality handheld computing products to a broad range of consumers, and these new prices on our line of handhelds make it more attractive for people to own a Visor handheld," said Greg Woock, Vice President of North American sales for Handspring, Inc. "With the end of summer nearing we are offering consumers one of the most featured-packed, expandable handheld computers on the market today." Further information from the Handspring web-site.
This isn't rumor either 
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