IDC: Market for Handheld Devices Continues to Decline

Posted By: Ryan Thursday, October 27, 2005 12:31:38 PM

The worldwide market for handheld devices experienced its seventh consecutive quarter of year-over-year decline in the third quarter of 2005. According to IDC device shipments decreased 16.9% year over year and fell 8.8% sequentially in 3Q05 to 1.6 million units.

Even as the overall market continues to trend downwards, device manufacturers are steadily pushing forward with new product introductions, software upgrades, and solution deployment, particularly GPS. Given these improvements and the upcoming holiday season, shipments are expected to increase sequentially but decline year over year in the fourth quarter. At the same time, the growth of converged mobile devices, which combine voice and data capabilities in a single form factor, is placing heightened pressure on the handheld market. Those vendors who offer both devices are starting to see shipments of converged mobile devices equal or surpass shipments of handheld devices.

"The combination of tremendous competition from converged mobile devices with waning consumer demand for handhelds is forcing manufacturers to search for new or improved solutions that leverage existing hardware and software capabilities," said Ramon Llamas, research analyst in IDC's Mobile Markets program. "Offering solutions beyond PIM, such as GPS, and reaching out towards first-time users are important steps, but will not necessarily bring about a return to growth. Finding and expanding more solutions to modern mobile consumers and enterprises have become imperatives for the handheld market to drive growth."

Vendor Highlights

Palm Leading the market is Palm, which experienced a 10.8% decline in shipments sequentially and a 22.7% decline year over year. For the first time, Palm's shipments of converged mobile devices outpaced the company's handheld devices. At the same time, the company augmented its portfolio with two new devices: the Z22, aimed at the first-time user, and the TX, targeted at advanced users on a budget.

HP Thanks to new product introductions in Europe and Asia/Pacific, HP grew 4.4% sequentially but decreased 35.4% year over year, maintaining its number 2 position. With devices aimed at enterprise and consumer users along a broad range of price points and its growing lineup of converged mobile devices, HP moves closer to balancing its portfolio across both markets.

Acer Marking its third consecutive quarter in the Top 5 is Acer, which saw 5.3% sequential growth but an astounding 421.0% year-over-year growth. A year ago, the company was a smaller player in the worldwide market, but has since benefited from the departure of other companies. Acer has yet to create a global footprint as most of its shipments remain only in Europe and Asia/Pacific, but at the same time still enjoys the popularity of its consumer-targeted n35 device.

Dell Holding steady in the number 4 position, Dell experienced a 9.6% sequential decline and a year-over-year decline of 13.9% in the third quarter. With the X3, X3i, and X5 all but gone from its lineup and the X50 and X30 reaching the end of their product lifecycles, Dell updated its portfolio with the introduction of the X51v. In addition, Dell's direct-sales model and ability to bundle its devices with other packages contributed to the company's continued success in the handheld market.

Mio New to the Top 5 list this quarter is Mio, which experienced a sequential decline of 22.6%, but impressive 58.0% growth from one year ago. Like third place Acer, Mio was a smaller player a year ago with shipment levels that kept it well outside the Top 5. But thanks to the success of its GPS-enabled 168, 268, and 269-series product lines, the company was able to slip past previous number 5 vendor Yakumo.

Top 5 Vendors, Worldwide Handheld Device Shipments and Market Share, 3Q 2005 (Preliminary)

Rank

Vendor

3Q 2005 Shipments

3Q 2005 Market Share

3Q 2004 Shipments

3Q 2004 Market Share

Palm

569,388

33.8%

736,481

36.4%

397,016

23.6%

615,515

30.4%

Acer

188,760

11.2%

36,232

1.8%

Dell

162,000

9.6%

188,200

9.3%

Mio

85,609

5.1%

54,172

2.7%

Others

282,780

16.8%

393,552

19.4%

Total

1,685,553

100.0%

2,024,152

100.0%

Notes:

Vendor shipments are branded shipments and exclude OEM sales for all vendors.

Handheld devices are pocket-sized, either pen or keypad-centric, and are capable of synchronizing with desktop or laptop computers. Handheld devices are designed to access and manage data including office documents, multimedia, and games.

Handheld devices do not include telephony but may include wireless capabilities that enable Internet access and text communication. These devices feature evolved operating systems or applications environments such as the Palm OS, Windows Mobile Pocket PC, Linux, or other proprietary platforms with the ability to download, run applications, and store user data beyond their required PIM capabilities.

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Actually these numbers look pretty good to me

JarJar @ 10/27/2005 4:08:19 PM #

Given the growth in smartphones and all the PDA switchers to smartphone, a decline of 17% year over year is not bad news. I'd like to see the total numbers that add smartphone and PDA together.

RE: Actually these numbers look pretty good to me

sr4 @ 10/27/2005 4:21:20 PM #

Canalys numbers use to tell you that, but since they did not break out the numbers by OS this time, the numbers are all messed up with Symbian and Linux devices. (13 million devices, but how many being used as PDA?)

Surur

RE: Actually these numbers look pretty good to me

fishtastic @ 10/27/2005 7:45:00 PM #

Should palm users who just store contacts in their pda be ignored as well? You can't ignore symbian because you believe, rightly or wrongly, that they aren't doing cool enough things with their phone.

When I had a S60 phone I used to load it with apps until it was full...

Fish

RE: Actually these numbers look pretty good to me

GWD @ 10/28/2005 11:19:47 AM #

I know this represents me. After using Palm products exclusively and loyally for years, I am going to switch over to a Blackberry. Palm just isn't supported as it used to be, and I'm just tired of carrying around a bulky PDA in addition to a cell phone. I'll miss the ebook type applications, which I used a lot, but I have everything I have on my Palm in hardcopy too, so I'll be saying so long to my handheld soon. I think I'll give it to my daughter to play with.

RE: Actually these numbers look pretty good to me

craigf @ 10/28/2005 11:38:56 AM #

GWD: Why go with Blackberry just so you don't have to carry two devices? RIM's on shaky ground legally at the moment, and the Treo 650 is an amazing device (and way more capable than any Blackberry). I'm not saying you're wrong, I just don't understand your decision.

RE: Actually these numbers look pretty good to me

e_tellurian @ 10/28/2005 12:15:10 PM #

Smartphones will have all the functionality of the above.

The issue is how will we choose to pay for our choices? It is not possible to multi task with one choice. One choices is only possible when we can not afford more than one. Some people can afford more than one and that market is not served with one choice. Try playing sports with one team what happens to quality when there is no competition?

The we-com (wireless electronic commerce) crew may have some thoughts to expand upon. A we-com industry wants competition so we may offer the best solution to interact with other choices.

Application(s):

When paper was invented we found many ways to interact with this choice. Some nations made their currency out of paper. Digital is the same type of innovation to paper. No one limited choices
when it came to interacting with paper so one must conclude that the same applies to digital too. Plastic was the next medium of choice with a digital core. The next evolution is a secure efficient digital choice that interact where people want to interact with their currency.

One can still offer more choices while others consolidate. It is not logical to stop innovation to wait for others, when the innovation interacts well with any out come.

E-T

e-tellurian

completing the e-com circle with a people driven we-com solution

RE: Actually these numbers look pretty good to me

GWD @ 10/28/2005 4:10:50 PM #

I am going to Blackberry because that is offered through my company - the cheaper route to get the basics of what I need. Free is always better than a few hundred dollars.

IIIxe, IIIc, M105, Vx, M505, Tungsten T, Tungsten T2

RE: Actually these numbers look pretty good to me

silkentiger @ 10/30/2005 2:05:36 AM #

>Should palm users who just store contacts in their pda be ignored >as well? You can't ignore symbian because you believe, rightly or >wrongly, that they aren't doing cool enough things with their >phone.

>When I had a S60 phone I used to load it with apps until it was >full...

Agreed. Just beacause the NA market is technoligically backwards when it comes to mobile technology, doesn't mean that more advanced countries haven't found convergence with PDA functions in alternative devices. Lets be real. There are so-called smartphones in Japan that are even more powerful, functionality-wise, than a stand alone PDA. I haven't been to Korea but, reading engadget, I think Korea is similarly enabled. Symbian is a "PDA OS" though this term is wrong. I can type faster using multi-tap than I can with a thumb board. I can even type on it while talking to someone else on another phone and using my other hand to type on a computer and still beat the average persson typing the same thing on a thumbboard. I am not alone. Those of us who grew up with texting have long since mastered the numberpad multi-tap. For those who declare its not a PDA OS if there no stylus, then there is UIQ.

I am not saying there are the same number of people %-wise who use only basic functiions on a Palm as there are who use a S6 smartphone as a phone only. Though I wouldn't actually be surpirsed if they were close to equal though. I know at least 8 Palm and PPC owners who do nothing more with their device than use the calendar, take some notes and play some games. Two use email and browse the web (PPC owners). For the rest, even showing them there is more, just say its too much trouble. However, it is ridiculous to dissmiss Symbian as a viable competitor to Palm or dissmiss it as a non-pda OS. That is simply not true nor is it factual.

Save democratic capital!

e_tellurian @ 1/23/2006 5:38:47 PM #

If the decline is real then buy all the facilities and work to create we-com industry choices. This would enhance existing investments while reducing our cost ... a win-win.

Retooling is still less expensive than building from scratch. We simply enhance the segments of the decline to fit advanced choices. This is NOT the same as cutting the roof off a car and calling it a convertible.

Prototypes first with the identified facilities, if this works well, then enhance the entire acquisition.

Quality in everything we do.

Peace,

E-T

e-tellurian

completing the e-com circle with a people driven we-com solution