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Disputed; see GermanHandy: according to some commentators, this meaning is originally from German (a condensed form of Handfunktelefon), whereas others claim there was an early, but now neglected, antetype of it in English (from etymology 1).
2000, TELESCON 2000: The Third International Telecommunications Energy Special Conference, IEEE, →ISBN, section 9 (Look at the Market), page 127:
An important field of application for small rechargeable lithium ion batteries is that of the fast growing market of cellular phones or ‘handies’. 277,000,000 handies were sold worldwide in 1999.
“I’m afraid Mister Franklyn is occupied until seven o’clock. He shall call when he breaks. I’ll take a handy to receive calls—”[…]The distance frees him to take phone calls on his handy.
2017, Sheldon Charles, From Within the Firebird’s Nest, Valkyrie Spirit Publishing, →ISBN:
Life was good and quiet until six weeks ago when he received a phone call on his handy from Unbekannt Nummer --Unknown Number.