IDC sees continuing decline in PDA market

If a handheld device doesn't have voice capabilities, a growing number of users around the world aren't interested, according to IDC. For the third straight quarter, shipments of handheld devices such as PDAs fell as some prominent vendors decided to pull back from the market, IDC said Wednesday.

Worldwide shipments totaled 2.1 million units in the third quarter, down 8.7% from last year's third quarter. IDC defines a handheld as a device that does not include telephony but may include Internet connectivity. This includes devices traditionally known as PDAs but excludes a growing category of devices known as smart phones, such as PalmOne's new Treo 650.

PDAs are in decline as mobile phone vendors have substantially improved the personal information management (PIM) capabilities of their phones. Most people don't want to carry two separate devices to manage their personal contacts and make phone calls, which has led to increased interest in devices such as PalmOne's Treo 650 and HP's iPaq h6315. Attendees at the Cellular Telecommunications and Internet Association's Wireless IT and Entertainment show in San Francisco this week flocked to booths from PalmOne and HP that had the new smart phones on display.

Vendors who fail to evolve their handheld devices beyond the core PIM capabilities will not succeed in this market unless they are willing to tolerate low margins, said David Linsalata, an analyst with IDC, in a release Wednesday. Companies such as Dell and Mitac International have made inroads into the market with low-cost, low-margin devices, but companies such as PalmOne, with higher cost products, have seen declines in their shipments.

PalmOne remains the overall shipment leader with 34.7% of the market, but its shipments declined 12.7% in the third quarter compared to the same period last year. HP's non-phone iPaq devices bucked the overall trend in recent quarters with shipment growth of 11.7% in the third quarter, putting it in second place. HP has steadily gained market share in recent quarters as PalmOne has devoted more resources to getting its Treo smart phone products up and running.

Sony decided this year to pull back from the international PDA market to focus on the Japanese market. Sony had long occupied the third position in this market, but its shipments fell a staggering 81.5% in the third quarter. Even with that decline, the company still made the top five vendors worldwide, ranking fifth.

Dell ranked third on the worldwide list and Mitac was fourth. Both companies are relatively recent entrants into the market and are gaining share with low-cost handhelds, IDC said.

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Copyright © 2004 IDG Communications, Inc.

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