PDA demand in decline

Worldwide demand for PDAs (personal digital assistants) continues to decline as manufacturers attempt to switch from selling electronic organizers to handheld wireless devices, according to International Data Corp.’s quarterly PDA report.

Global shipments of PDAs in the first quarter of 2002 fell 12.1 per cent year on year in the first quarter, and dropped 25.4 per cent compared to the fourth quarter of 2001 to 3.25 million units shipped, IDC said.

Though sales of PDAs are usually expected to decline in the first quarter of the year, due to a seasonal lull after the Christmas holiday gift-giving season, general demand for PDAs has been stagnant over the past year, IDC said.

Palm Inc. of Santa Clara, Calif., continued to dominate both the U.S. and the worldwide PDA market, holding a 39 per cent share of the worldwide market (1.27 million units shipped) and 47.5 per cent of the U.S. market (810,880 units shipped), IDC said.

Palm, which once stood virtually alone in the PDA market, has faced fierce competition from companies such as software licensee Handspring Inc. and other manufacturers using Microsoft Corp.’s software. Last month, Palm posted a small profit of US$2.9 million for its fiscal third quarter ended March 1, despite a year-on-year decline in revenue of 38 per cent to $292.7 million.

In the worldwide PDA market, Palm’s nearest competitor was Houston vendor Compaq Computer Corp. (10.1 per cent of the market with 329,000 units shipped), followed by Handspring (9.9 per cent of the market with 322,000 units shipped), Sony Corp. of Tokyo (7.7 per cent of the market with 250,000 units shipped) and Sharp of Osaka, Japan, (4.5 per cent of the market with 145,720 units shipped), IDC said.

Compaq in particular had a strong showing in the European PDA market, overtaking Handspring for the number two slot for the first time, IDC said.

The Compaq iPaq product has been performing so well that, should the acquisition of the company by Hewlett-Packard Co. (HP) be finalized, the iPaq would most likely become the PDA product line for the merged company, IDC said. With that transition pending, HP’s worldwide PDA shipments declined 43.9 per cent sequentially in the first quarter, which IDC said was “not surprising.”

In the U.S., Handspring held the number two position in the PDA market (14.6 per cent of the market with 249,000 units shipped), followed by Sony (10.8 per cent of the market with 185,000 units shipped), Compaq (8.6 per cent of the market with 146,250 units shipped) and the Waterloo, Ont., company, Research In Motion Ltd. (five per cent of the market with 85,000 units shipped), IDC said.

Earlier this month, despite a net-income loss of US$23.7 million for its third quarter, Handspring said it was confident that its Treo communicator product – a combined mobile phone and PDA – would help lead the company back to profitability. But the Mountain View, Calif., company pointed out that the transition to selling wireless devices required more training for its sales staff to sell the product.

– IDG News Service