When the Nokia Communicator was launched in 1996 it was the first commercial product to combine the functionality of a mobile phone with that of a personal digital assistant (PDA), including electronic calendar and address book capabilities. Its introduction led pundits to predict that the mobile phone and electronic organiser would soon merge into a single device.

But, while later versions of the Communicator have seen continuing improvements in the technology - the next one will include a full-colour screen and redesigned keyboard - the market for a converged phone/PDA has remained niche.

"By the end of last year around a million communicators had been sold," says Carsten Schmidt, associate analyst at Forrester Research. "When compared to the overall market for, on the one hand, Palm devices, and on the other, GSM phones, the figure is tiny."

Nokia alone manufactured 128m mobile phones last year. And with entry-level prices now about £10 or the equivalent in many European markets, many have found the £250 price-tag of the Communicator an expensive way of combining a phone with an electronic organiser.

But the fundamental problem, says Mr Schmidt, is that people baulk at the cost of a stand-alone PDA, let alone one bundled with a phone. "The reality is that the PDA remains an absolutely overpriced address book and calendar."

Until recently, therefore, Nokia's competitors have been reluctant to follow its lead. However, recent excitement over the mobile internet, and the opportunity to add e-mail, Wireless application protocol (Wap) and data communications to mobile devices, has put convergence firmly back on the agenda.

Mobile phone manufacturers, for instance, are introducing smartphone devices, such as the Kyocera smartphone and the Ericsson R380 - which combine phone and PDA-like functionality, plus Wap, e-mail and messaging services.

And PDA manufacturers have begun to add voice and data communications to the traditional electronic organiser. Last December, for instance, saw the US launch of the Handspring VisorPhone, a clip-on mobile phone that attaches to the PDA's expansion slot, and costs $299.

But the clearest evidence that the market for converged devices is heating up is Microsoft's decision to develop a new smartphone platform codenamed Stinger. Stinger will support voice and data communications, including GPRS - the so-called 2.5G wireless packet switched service - as well as pocket versions of Microsoft's popular Outlook and Internet Explorer applications.

So, is the mobile phone finally converging with the PDA? "Absolutely," says Jeremy Gittins, group marketing manager, strategy business, at Microsoft UK. "And broadband wireless is the killer technology that will really kick it off. It will see the whole wireless industry being built around data traffic to personal devices."

But, while faster networks will help, successful convergence will depend on a number of other factors, too, not least the ability of manufacturers to integrate the functionality of phone and PDA into a single device - while at the same time retaining the weight, useability and compactness that users expect. Pricing will also continue to be an issue.

Herein lies a challenge, concedes Richard Ward, head of UK operations at mobile phone manufacturer Trium. "The characteristics of both devices do not all come in a small package, so there is always going to be a trade-off between things like screen size, weight, and battery consumption," he says.

And, as the complexity and functionality of the devices increases, so does the challenge. PDA users, for instance, increasingly expect a colour screen. "But", says, Mr Ward, "colour PDAs are inevitably much bigger, heavier and more expensive than mono screen ones."

One way of mitigating this problem is to use the modular approach pioneered by Handspring - and provide an extension slot to which additional functionality, such as the VisorPhone, can be added as and when required. "In this way we can offer an entry-level device without any modules, making it both cheaper and lighter," says Eric Tholome, European product line manager at Handspring.

This approach is being adopted by Palm, too. While current versions of its PDA do not have an expansion slot, future models will. "This will be very similar to the Handspring one, but smaller," says Bill Mackay, Palm's UK and Ireland country manager. "So users will be able to clip on a phone/modem, a camera, Bluetooth devices or whatever."

Mobile phone manufacturers, on the other hand, are more inclined to combine as much functionality as possible in one integrated device. The Trium Mondo, for instance, offers a potent mix of voice, electronic organiser, e-mail and fax, as well as GPRS, Wap, a pocket version of Internet Explorer, plus the ability to play MP3 and video files. At around £400 it is not cheap.

"But having it all in one package is much better than having two or three items all clipped together to do the same job," says Mr Ward.

Another challenge lies in developing an interface capable of meeting the demands of both devices - not least the greater level of data input which PDA and e-mail applications require.

Where Palm and Handspring have focused on the use of a touch screen and stylus, Nokia is a firm advocate of the traditional keyboard - albeit a downsized one.

"A Qwerty keyboard is far more efficient than any other input method available today," insists Pekka Isosomppi, communications manager at Nokia Mobile Phones.

However, the interface problem will lessen as technology develops. Already a number of mobile phones include voice-activated speed dialling, and as voice recognition capabilities improve, so voice could become the primary interface.

At that point, says Geoff Wissman, principal consultant in PricewaterhouseCoopers' global retail group, "the screen and keyboard will become a minor issue."

Short-distance wireless technologies such as Bluetooth should also help. By enabling fast 'cableless' data exchange between different devices, including PCs, wireless area networks, and other hand-held devices, the amount of data needed to be entered manually will decrease.

The greatest challenge, however, lies in creating 'must-have' applications for the new devices. Microsoft is focused on providing pocket versions of desktop applications such as Word, Excel and Outlook for the new devices, but many are sceptical that users want this on a hand-held device.

"Too many people think that the mobile device is just a shrunk down version of what we do on our desktop today," says Margaret Rice-Jones, managing director of UK-based PDA manufacture, Psion Computers. "But that misses the point."

Mr Wissman agrees. "It will need to empower people to do new and different things." Nevertheless, he is confident that a multitude of new applications will evolve, with converged devices also becoming e-wallets, electronic keys, and e-identification appliances. "They may also include scanners, which consumers could place on the bar code of a supermarket product, say, and have nutritional and cooking information flash up on their device."

This implies the devices will converge, and become ubiquitous. But Mr Schmidt is more cautious. "We don't see a mass market for converged devices, because they will continue to be too expensive. It will be a small market, mainly focused around business people. And while there will be convergence, there will also be fragmentation, with more and more different devices, some more a phone, others more PDA."