Compaq says iPAQ sales to corporations on the rise
NEW YORK, April 22 (Reuters) - Compaq Computer Corp. (NYSE:CPQ - news) on Monday said its Microsoft Windows-based handheld computer hit the 2 million units sold mark, gaining on the popular Palm operating system-based machines.
To catch up with Palm Inc. (NasdaqNM:PALM - news), however, Compaq, the No. 2 personal computer maker, has to sell 15 million more of the handhelds.
Compaq's Peter Blackmore, executive vice president of sales and services, says to do that, the company is going after the corporate customers who are already buying computers from the Houston, Texas based company.
Compaq sells computers used by businesses to manage their networks as well as data storage machines, personal computers, and computer services. The company's shareholders have approved its purchase by Hewlett-Packard Co. (NYSE:HWP - news), but HP's shareholder vote is being contested.
``We've worked hard at doing a solution sale rather than just a device sale,'' Blackmore said in an interview.
``The customer is looking at us and saying can you provide the integration skills, the application skills, the servers to run it and the services to help run it. It's really an end-to-end sale,'' he said.
Compaq said revenues for its iPaq handheld, which sells for about $600, rose by 18 percent in the first quarter from a year-ago to $160 million as unit shipments rose by 14 percent.
Palm, meanwhile, said its fiscal third-quarter revenues, which ended in March, fell 38 percent and Handspring Inc. (NasdaqNM:HAND - news), which sells handhelds based on the Palm operating system, saw its third-quarter revenues fall 52 percent.
PALM'S GRIP LOOSENING
Palm has ruled the handheld market since 1988 when, as a unit of former parent 3Com Corp. (NasdaqNM:COMS - news), it sold more than one million of its early PDAs. Compaq, along with other rivals like Japan's Sony Corp. (6758.T) and Finland's Nokia Corp. (NYSE:NOK - news) have since challenged it, introducing their own hand-held computers or adding such features to existing products.
Palm's grip on the market has loosened slightly, industry data shows. Research firm Dataquest said that Palm's slice of the global Personal Digital Assistant (PDA) market fell to about 39 percent percent in 2001 from 50.4 percent in 2000.
Still, in 2001, Palm shipped 5.1 million units, more than the combined shipments of Compaq, Handspring and H-P, the No. 4 handheld maker.
But Compaq's popularity surged in the first quarter of 2002, according to research firm International Data Corp. Compaq ended the first quarter with a 10.1 percent share of the worldwide handheld device market, up 18 percent from a year ago, and overturning as the No. 2 handheld maker Handspring, which scored a 9.9 percent share in the quarter, IDC said. Compaq made strong inroads in the European market.
If HP and Compaq merge as planned, it is uncertain what the new company's plans are for the iPaq and H-P's Jordana model, although analysts expect them to keep the iPaq.
The handheld computer market went through a topsy-turvy year in 2001, as early robust demand was deflated by the economic slowdown and what was perceived as a dearth of compelling reasons for buyers to replace the existing models.
Today, after five years of rapid growth, the handheld market is in transition, with manufacturers adding more powerful tools for communication and information exchange.
Compaq said that during the quarter it signed several contracts, including one for iPaqs to be used in the Vanderbilt University Medical Center in Nashville, Tennessee; for development of applications for the aviation and golf industries; and with Raytheon Co. (NYSE:RTN - news), which will make a military version of the iPaq for use in the field.
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