Multifunction Trend Shaking Up The Handheld Device Industry; Solid Sales Expected In 2004; PDA, handset, camera -- one single, small product can fill a variety of roles.(INTERNET & TECHNOLOGY)

Byline: PATRICK SEITZ

Cell phones with built-in cameras were surprise hot sellers in 2003, showing that consumers are looking for more capability from their mobile devices.

Camera phones should continue to sell well in 2004, analysts say. But this year, smart phones could steal the limelight. Analysts expect smart phones, which combine handheld computers with mobile phones, to have a breakout year.

"The big story (in 2003 was) that people finally started to get smart phones right," said Peter Rojas, editor of Gizmodo, which bills itself as the gadgets Weblog. "They still have a long way to go. But the first smart phones that you'd actually want to use came out (in 2003)."

Those devices include PalmOne Inc.'s Treo 600 and smart phones using Microsoft Corp.'s Windows Mobile software, including Motorola Inc.'s MPX 200 and Samsung Electronics Co.'s i600.

Such combination cell phone-personal digital assistants are "going to be hot items" in 2004, said Tim Bajarin, president of consulting firm Creative Strategies Inc. of Campbell, Calif.

Mobile business users will form the initial customer base for smart phones, because the devices help with communications and productivity, he says.