Global PDA Sales Drop 9 Percent in 2002
Mon Jan 27, 1:52 PM ET
Jay Wrolstad , Wireless.NewsFactor.com
story.news.yahoo.com
The PDA industry took it on the chin last year, with global sales down 9 percent from 2001 totals, according to research firm Gartner Dataquest. Dismal economic conditions and a dearth of compelling new devices are cited as the principal factors contributing to the decline.
The big three -- Palm (Nasdaq: PALM - news), Hewlett-Packard (NYSE: HPQ - news) and Handspring (Nasdaq: HAND - news) -- each shipped 600,000 fewer PDAs last year compared with 2001; the industry as a whole sold 12.1 million units in 2002. The enterprise sector was expected to drive PDA sales, but that has not happened, Gartner analyst Todd Kort told NewsFactor.
Entrprise Watches the Bottom Line
Some 70 percent of all handheld computers are purchased by consumers and just 30 percent by businesses, Kort said. IT budgets have been slashed because of poor economic conditions, and the rollout of wireless PDAs has been slow, keeping businesses from purchasing new devices.
IDC analyst Alex Slawsby also cited the economic downturn as a primary factor for slumping PDA sales. "Enterprises are holding off on their purchases, with most users sticking with the products they have," he told NewsFactor. "It's not a priority; most companies had to invest in updates of their laptop and desktop computers, which they had put off."
Businesses want wireless handhelds but are reluctant to buy them at this point, according to Kort, primarily because of concerns about secure communications with WLANs (wireless local area networks). "Another problem is that the data transmission speeds are below what has been advertised," he said.
Palm Maintains Grip
Palm's worldwide PDA shipments fell 12.2 percent in 2002, but the company still doubled the sales of its nearest competitor, Hewlett-Packard. Sony was third with 1.3 million devices sold. Toshiba, which began shipping PDAs in late 2001 in Japan, saw substantial growth and became the number five vendor worldwide last year.
In the U.S. market, Sony leaped from sixth place in 2001 to second place, behind Palm, in 2002, with shipments growing 351.8 percent. Palm's low-end, US$99 Zire device accounted for most of the company's sales, but Kort said the company faces a challenge at the higher end from Sony, among others.
"Sony is capturing the Palm upgrade market; they have more compelling devices and customers are migrating toward them," he noted.
The Smartphone Factor
The new Tungsten wireless PDA, expected soon, should help Palm, according to Slawsby. He noted that sales of the Tungsten T model have been strong since its introduction earlier this year.
Handspring has essentially abandoned the PDA market, Kort noted, focusing instead on its smartphone line, which has impacted sales as well. Slawsby suggested that Handspring could have trouble remaining competitive and may be ripe for acquisition.
More phones are coming out with basic PIM (personal information management) functions, and that could impact Palm down the line. "This is the year of smartphone hype, but I do not see them gaining significant sales until 2004," said Kort.
Pocket PC Gains Ground
HP, whose PDA sales fell 27 percent in 2002, suffered from the transition of two companies into one that resulted in a smaller product line. "They also dropped the ball by not offering compelling devices with integrated wireless capability, while companies like Toshiba did offer such PDAs," said Kort.
In the operating system realm, Palm OS holds a commanding lead with 55 percent of worldwide PDA shipments, with Windows CE holding 26 percent. "Palm has a huge installed base, but Pocket PC is gaining ground. Dell's (Nasdaq: DELL - news) entry into PDAs could be a significant boost for Pocket PC," said Kort.
Kort projected that PDA sales will increase 10 to 15 percent this year. "It was not until the end of the year that we saw some truly compelling products, and we will see more of them in 2003," he said.
Slawsby offered a similarly optimistic outlook but said future PDA sales will hinge on economic improvement. "When there is more confidence, people will spend more money," he said. "We should return to double-digit growth in the near future." |
