Compaq iPAQ Q2 sales to top Palm's - survey
SAN JOSE, Calif., June 18, (Reuters) - Palm Inc. (NasdaqNM:PALM - news), the dominant player in the handheld computer sector, looks set to lose its market share lead in the current quarter -- measured in revenues -- to Compaq Computer's (NYSE:CPQ - news) pricier line of iPAQ handhelds, a survey due out on Monday will show.
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Dataquest, a unit of high-tech market research firm GartnerGroup, said its data suggests that Palm will retain a strong margin in terms of units shipped, but that it will lose its lead, based on total revenue, to Compaq's iPAQ.
Compaq's market share gains in handheld computers marks the progress the Houston-based personal computer maker is making in expanding beyond its traditional personal computer product base, where it has been losing ground. It recently slipped to No. 2 behind Dell Computer Corp. (NasdaqNM:DELL - news) in global PC sales.
Dataquest projected Palm will post hardware revenue of $130 million to $135 million for its fourth quarter, which ended June 1. That's below the $140 million to $160 million Palm itself forecasted when it warned of lower results in mid-May.
Handspring (NasdaqNM:HAND - news), also maker of handheld devices based on Palm software, expects revenue for its fourth quarter ending June 30 to be in the $60 million to $65 million range.
But it's Compaq that seems to have become leader of the pack. The Gartner Dataquest survey found that Compaq appears poised to assume the world market lead in revenue terms for Personal Digitals Assistants (PDAs) for the second quarter ending June 30, 2001, with revenue exceeding $200 million.
While Compaq is expected to sell fewer iPAQ handheld PCs in the second quarter, Compaq has a much higher average selling price than Palm or Handspring. Compaq iPAQ consumer models carry list prices around $399 for black-white screen devices and $599 for color models. Business models are more expensive.
By contrast, basic Palm units range between $99 and $299, with the latest color models selling for around $449.
``As better wireless messaging capabilities have become available, many enterprises are considering large volume purchases of (Personal Digital Assistants). Palm has little to offer such companies,'' Dataquest analyst Todd Kort said.
Beyond the mere statistical significance of Compaq's move into the No. 1 position in revenue terms, the shift suggests the speed with which a recent slowdown in sales of handheld computers could lead to mounting pressure on Palm.
Analysts have previously projected that the Santa Clara, California-based Palm would generate $300 million to $315 million during its fourth quarter, or more than double the level before it was hit by delays in the debut of new, pricier high-end Palm devices, and a glut of older, cheaper models.
Palm posted revenue of $350 million in the fourth quarter of fiscal 2000 and $471 million in fiscal third-quarter 2001.
Compaq's move into first place in revenues appears to be a measure of the appeal which the Houston-based personal computer maker is having for handheld users who want to carry a mini-, mobile version of their desktop PCs when away from the office.
The iPAQ runs slimmed-down Microsoft software programs that easily tie in to standard office applications and can handle heavy e-mail volumes. By contrast, Palm devices do not run Microsoft software directly, nor handle heavy e-mail usage.
``A growing portion of new users and users who are upgrading want better messaging capabilities, such as access to corporate e-mail, short message services, wireless (networks) or (links) ... with a mobile phone,'' Kort said. ``This is especially true of corporate users,'' he added.
Dataquest analysts said there had been little improvement in the Palm operating system software since the company was spun-off 3Com Corp. (NasdaqNM:COMS - news) in the second quarter of 2000. This has enabled Microsoft to catch up with its Windows CE 3.0 software for handhelds, the research group said.
Momentum is likely to continue for Compaq and other handheld devices based on Microsoft's software. With Microsoft's next version of Windows CE, code named ``Talisker'' due out at the end of this year, the company is poised to make a much stronger play for the corporate market, Dataquest said. |
