Dataquest: Microsoft gains on Palm in PDA market

PDAs based on Microsoft’s Pocket PC operating system now account for 30% of the worldwide PDA market compared to 48.6% for PalmSource’s market leading Palm OS, according to research released Monday by Dataquest, a unit of research company Gartner.

Pocket PC-based handheld computing systems reached the 30% market share level in the third quarter of 2002, up from a 16.2% share in the third quarter last year, according to Dataquest figures.

Worldwide sales of PDAs in the third quarter of 2002 reached 2.64 million, 0.9% up on the 2.61 million sold in the equivalent quarter last year.

Palm remains the dominant vendor with 809,000 sales, representing a market share of 30.6%, more than double its nearest rival Hewlett-Packard, whose 382,000 unit sales represented a 14.4% market share.

Sony, Toshiba and Handspring completed the list of the top five vendors, which between them hold over two-thirds of the market.

The gain of the Pocket PC OS against Palm was helped by the strong impact made by Toshiba in the market. From a trickle of sales in the third quarter last year, Toshiba has sold 144,000 PDAs this year to garner a 5.5% share.

A further challenge to Palm’s leadership is expected when Dell releases a Pocket PC-based PDA later this year, Dataquest said.

“After a slow but steady decline, the Palm OS market share appears to have stabilized, but new challenges are on the horizon,” Dataquest said in a statement. “Much more competitive pricing from Pocket PC vendors beginning in the fourth quarter of 2002 will undoubtedly stimulate growth in Pocket PC shipments and allow Palm less breathing room. Dell and Toshiba appear ready to lead this battle.”

Along with Dell and Toshiba, HP, Casio and NEC are the major Pocket PC licensees

Major players in the Palm OS camp include Palm, Handspring, Sony, Kyocera and Samsung Electronics Co. Ltd.

Acer sells Palm OS and Pocket PC-based PDAs, while Sharp’s Zaurus PDA runs a version of the Linux OS.

In the U.S., Palm’s dominance is clearer. Palm PDAs have a 39.4% market share, and the combined market share of all Palm OS licensees is around 65%, boosted by extremely rapid sales growth of Sony PDAs. The U.S. market accounts for just under half of worldwide PDA sales.