Europeans snatching up handheld devices, study shows

Even if money is a bit tight because of the struggling economy, that isn’t keeping Europeans from buying mobile devices.

Second-quarter mobile device shipments in Europe, the Middle East and Africa (EMEA) leapt 239 per cent from the year before, thanks in large part to the arrival of new smart phones, according to a study released Tuesday by Ltd., a market research group based in Reading, England.

Data-centric handheld devices, with and without wireless connectivity, increased 51 per cent year on year – the highest rise in over two years, Canalys said in a statement.

In this segment, Palm Inc. retained its lead with a 34 per cent market share. The company shipped 210,850 units in the second quarter, up 45 per cent from the same period a year earlier.

The second largest supplier was Hewlett-Packard Co. (HP) with a 25 per cent share, but the vendor saw its second-quarter shipments grow only two per cent to 154,600. Chris Jones, an analyst at Canalys, attributed the slight increase to HP’s focus on clearing distribution channels for new models, expected in the coming months. Jones said he expected the company to have a better third quarter.

Pursuing a strategy that has made the vendor a household name in the German PC market, Medion AG grabbed the number three position in the market for data-centric handheld devices. The German company, which has emerged as one of the country’s leading suppliers of desktop and notebook computers largely by selling its products through the discount supermarket chain Aldi Einkauf GmbH & Co. OHG, entered the market in the second quarter with a low-cost, application-rich handheld device.

The device, which sold out quickly in northern Germany and is now on sale in the southern half of the country, costs 499 euros (US$567) and features navigation software from Tele Atlas NV and a Global Positioning Service (GPS) module, bundled around other organizer applications such as e-mail, address book and calendar.

“We weren’t too surprised by Medion’s performance in the handheld market because of its successful partnership with Aldi,” Jones said. “But what was interesting to see was their strategy of promoting the product not as a personal digital assistant (PDA) but as a navigation system, bundled around a pocket PC. The emphasis was on the application, not the device, and that’s certainly different.”

Nokia Corp., the world’s largest supplier of mobile phones, dominated the relatively young market for voice-centric smart phones and combined feature phone segment with a 78 per cent share, shipping 838,650 units in the second quarter compared to 59,220 units the year before.

Canalys defines feature phones as devices used primarily for voice with limited storage capabilities and smart phones as devices with greater storage facilities, such as expansion slots, that allow operating system-based applications to be added without restriction.

Feature phones, according to Jones, will fade out over the next two to three quarters, to be replaced by smart phones.

Sony Ericsson Mobile Communications AB, the second largest supplier of voice-centric devices, saw its market share in the second quarter climb to 15 per cent from four per cent a year earlier, after shipping 164,750 units from 3,410 units a year earlier.

Orange SA, the French mobile operator active in several European markets, was in third place. In October, the operator launched the world’s first mobile phone running Microsoft Corp.’s Windows-powered Smartphone 2002, the Orange SPV.

The tri-band phone, which works in Europe as well as Asia and the U.S., was manufactured in Taiwan by High Tech Computer Corp. (HTC). Orange has customized the Smartphone software to give it its own look and feel.

“We’re going to see more operators with their own branded phones moving ahead,” Jones said, citing Vodafone Group PLC and T-Mobile International AG as two primary examples.

As for the take-up of Microsoft’s mobile phone operating system in Europe, Jones said “it’s early days” for the U.S. software giant, which is “still on a learning curve.” The rival operating system developed by Symbian Ltd., he said, is firmly anchored in the products of the region’s top tier vendors, including Nokia and Sony Ericsson.

“The mobile phone sector is a very complicated one; products must be rigorously tested,” Jones said. “There will be a market for Microsoft’s Smartphone but it remains to be seen how large.”