Benhamou Predicts 10% Annual Handheld Growth

Palm interim CEO Eric Benhamou said yesterday that worldwide sales of handhelds will grow only 10% this year, which is lower than industry analysts have said. Palm announced last month that it wouldn't meet its sales goals for this quarter and blamed the shortfall on slowing worldwide demand for handhelds. Mr. Benhamou predicted that analysts, once they have had a chance to look at sales figures for the first part of this year, will lower their expectations for handheld sales growth, too.

In April, Gartner Dataquest said it thought worldwide sales of handhelds would increase 18% this year. In May, IDC released a report predicting that 2002 worldwide handheld shipments would increase 13% over 2001.

Judging future growth isn't as simple as looking at past sales and following the trend. Both IDC and Gartner believe handheld sales will pick up later in the year, though the two companies cite different reasons. IDC sees handheld sales increasing as the world economy continues its recovery. Gartner says the release of Palm OS 5 will set off a wave of current users buying upgrades.

"Palm OS licensees appear to have the greatest upside potential in the second half of 2002," said Todd Kort, principal analyst for Gartner Dataquest's Computing Platforms Worldwide group. "Many of the more than 14 million current Palm OS users may be enticed to upgrade to new devices following the launch of Palm OS 5 if the launch is well executed and the new OS and associated devices deliver sufficiently enhanced functionality."

Mr. Benhamou made his prediction at the CIBC World Markets investor conference yesterday.

Related Information:

• PIC:Palm Inc. Announces Lower Q4 Revenue Outlook
• PIC: Handheld Sales to Increase 13% this Year
• PIC: Growth in Handheld Sales Remains Steady