Compaq expected to overtake Palm on PDA revenue

Compaq Computer Corp. is poised to topple Palm Inc. from its position as the number-one earner in the PDA (personal digital assistant) market, according to a new report from research and consulting company Dataquest Inc., a unit of Gartner Inc.

Compaq is expected to report revenue of more than US$200 million from its iPaq handheld PC line in the second quarter, ending June 30, while Palm’s hardware revenue is projected at $130 million to $135 million for its fiscal fourth quarter, which ended June 1, Dataquest said in a statement Monday.

Palm still leads in the number of units sold, but iPaq’s much higher average selling price gives the company a revenue edge, the study concluded.

Taking third place in the market is Handspring Inc., which recently projected revenue in the $60 million to $65 million range for its fiscal fourth quarter, ending June 30.

The iPaq, which runs Microsoft Corp.’s Windows CE operating system for the Pocket PC, is gaining popularity with business users, especially due to its better wireless messaging capabilities, Dataquest said. Palm has fallen behind in innovation in this area, where users are demanding such services as access to corporate e-mail, SMS (short message service), WLAN (wireless local area network), or integration of a PDA with a mobile phone.

Palm has offered few improvements to its Palm OS software since the company split with its former parent 3Com Inc. last year, allowing Microsoft to catch up with its Windows CE 3.0, the researchers said.

Microsoft’s planned successor to Windows CE, code named “Talisker,” is due at the end of this year, giving the company a chance to solidify its lead with corporate users.

Compaq, in Houston, can be reached at Palm, in Santa Clara, Calif., is at Handspring, in Mountain View, Calif., is at Microsoft, in Redmond, Wash.