More: Handheld Market Boomed In '98 - Study
NewsBytes - February 08, 1999: 04:58 a.m. ET
SAN JOSE, CALIFORNIA, U.S.A. (NB) -- By Craig Menefee,
Newsbytes. The worldwide handheld market rocketed up 61.4
percent in 1998, according to figures to be released later Monday by
the Dataquest unit of Gartner Group [NYSE:IT]. Palm Computing
kept a handy lead, though its market share slipped about a point,
according to Dataquest's figures.
Dataquest analyst Scott Miller told Newsbytes the advent of
Windows CE color screens and other features is raising buyers'
expectations but the cost in short battery life and operating speed is
too great for CE to take over yet.
"There's no way around color being compelling to users," Miller
said. "That's not completely a rational thing -- I'd just always rather
have a color product than not. And the color handheld PCs are very
attractive. But you pay a high price for it, in terms of dollars, and the
battery life suffers quite a bit."
He continued, "I think what's going to happen this year is that
users will want many of the features of the Windows CE platform,
but will want them at a price and form factor and operating or usage
model that Palm can provide. So you're going to get very mixed
reactions from the market."
Miller says neither Windows CE nor the Palm Computing
platform has quite found the "sweet spot" between features and usage
life that would bring a clear win in the marketplace. For now, Palm
devices hold about 40 percent of the market, Windows CE holds
about 25 percent, and the rest is scattered between proprietary
systems, DOS and other specialty systems.
Finding the sweet spot will take the right combination of features
and battery life, says Miller. On the one hand, a Palm Pilot can run
for weeks on a few AA batteries -- but a handheld device doesn't
need to run for weeks if it can sit in a cradle recharging most of the
time.
On the other hand, Windows CE has a device with color screens
and a general purpose operating system -- but the batteries run down
much too quickly, it eats more resources, it's more expensive and it's
heavier to carry.
Miller says the vendor who manages to combine Windows CE
features like color with Palm features like speed, low weight and
extended battery life will have a winner.
A device with "the right stuff" may still be lacking, but Dataquest
says 1998 growth was "explosive" as advances in chip technology
led toward smaller, lighter handhelds. It has not hurt that consumers
as well as corporations have caught on to the advantages -- and status
-- of the miniature devices.
Worldwide handheld shipments surpassed 3.9 million units in
1998, the firm said. Of that. 3Com's Palm Computing Division
shipped 1.6 million units or 40.1 percent of the worldwide total. The
numbers represent a 57.1 percent growth for the year, the kind of
boom year that brings cheers to boardrooms.
If there was a shadow, it was that 3Com's 40.1 percent market
share dropped slightly from 1997's 41.2 percent figure.
3Com was not alone is losing market share. Third-ranked Psion
PLC and fourth-ranked Hewlett-Packard also lost market share. HP
did the worst of any listed firm, slipping from 9.7 percent to 6.8
percent of the total worldwide market despite double-digit 12.1
percent growth.
Dataquest notes 1998 was a transition year for HP. Stated Miller,
"Hewlett-Packard is moving from its traditional DOS-based HPC
products to new Windows CE models. The company shipped more
Windows CE products than anyone in 1998, and we expect
significantly higher growth rates in 1999 as shipments begin to track
with Windows CE growth."
Sharp, Philips Mobile, NEC and "all others" gained market share
in 1998. Sharp kept the number two spot with 20.8 percent market
share, up from 20.0 percent in 1997. Miller says Sharp has a tradition
of special-purpose, proprietary devices that once made it the top
handheld vendor in the world, and its future in the market may
depend partly on how well it shifts to a CE or Palm standard.
Sixth-ranked NEC topped the chart for growth, zooming from 0.6
percent to 4.3 percent of the total, a 1.004.5 percent increase.
As for the future winner, Miller says it's too early to guess. He
says Windows CE taking its share mostly from proprietary and
DOS-based systems, which are starting to fade away.
"Palm devices can use less memory, and between all those things,
color may be within reach for Palm within the desired usage model,"
Miller told Newsbytes. "But a fair amount of the total growth came
from new form factors."
He added, "Companion notebooks hit the market this year,
devices like the HP Jornada. They're still a bit pricey, but that class
of products hit close to 100,000 units shipped this year. Over the
long run, the Jornada may be close to where the market is going."
Dataquest is on the World Wide Web at dataquest.com
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