Growth in Handheld Sales Remains Steady

Worldwide sales of handhelds are expected to increase 18% this year, according to a study by Gartner Dataquest. This is approximately the same rate of growth seen last year. While many market segments would be thrilled by two years of almost 20% growth, in 2000 handheld sales increased 114%.

The market continues to shift toward devices with color displays, more powerful processors, and more storage capacity, and the research company predicts spending will increase more than 20% this year, to $4.6 billion, up from $3.8 billion in 2001.

Gartner Dataquest projects that 15.5 million handhelds will be shipped in 2002. It predicts an even stronger rate of growth for next year, as the economy recovers and business purchases increase.

The latter part of this year could be a bright one for Palm OS licensees who embrace the move to the next generation of the operating system.

"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."

Wireless technologies such as Bluetooth, WLAN, and WAN are either being built-in or added-on to an increasing proportion of handheld computers. This will help them compete with a rapidly growing competitor, smartphones.

"The build-out of packet-switched data networks such as GPRS and CDMA 1x will focus attention on wireless data devices and the growing competition between PDAs and smartphones," Mr. Kort said. "However, smartphones probably will not overtake PDA shipments until late 2002 or early 2003. We expect 2003 to be a strong year for growth in the PDA market, but from 2004 onward, sales of PDAs will be increasingly impacted by competition from smartphones."

According to the company's research, enterprise sales still make up a small segment of the handheld market.

"Roughly three-fourths of all PDAs purchased worldwide in 2001 were sold to individuals who bought them with their own funds, and the remainder were purchased or reimbursed by enterprises," said Mr. Kort. "The increasing capabilities of these devices and the growing availability of wireless technologies are beginning to stimulate large corporate purchases as solid productivity gains are realized, based on applications such as wireless e-mail or accessing corporate databases from remote locations."

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PalmOs 5 sufficiently un-enhanced functionality

Alan @ 4/3/2002 2:59:40 PM #
"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."

Hmmm... "sufficiently enhanced functionality" ... At which point the bosses of Palm Inc should
reply by quoting Homer Simpson.... DOHWPP!!.

I hope PalmOs5 does well, but I wish we were getting PalmOs6 now, and not having to wait 18 months?
or however more time it is to wait?.

Oh well, I guess there's Sony Clie machines to look forward to increasing their sales. :)

(And I think its great news that "three-fourths of all PDAs purchased worldwide in 2001 were sold
to individuals" :)

Still, any increase in PDA numbers is good news. :)


RE: PalmOs 5 sufficiently un-enhanced functionality
Ed @ 4/3/2002 3:35:06 PM #
When I interviewed Mike Mace a couple of months ago, he said PalmSource intended to have OS 6 (or whatever it gets called) out six to nine months after OS 5. He specifically said, "It's not going to be 18 months between releases."

If you haven't read the full interview, take a look at it here:
www.palminfocenter.com/view_Story.asp?ID=2966

---
News Editor

RE: PalmOs 5 sufficiently un-enhanced functionality
I.M. Anonymous @ 4/3/2002 3:49:29 PM #
Guess and speculation:

Let's just say June release of OS5.0 sticks, give it another 6 months, that would be January at most optimistic time table. We are definitely not going to see OS 6.0 before christmas 2002. It will be 1stQ 2003 at the earliest.

OS 5.0 devices, assuming final release is June, give it another 4-5 months for Sony to come up with a machine and distribute it. That means early November.

Now if Palm is doing OS5.0 machine, we should rah-rah around August. mock up, hype, advertisement leak, manufacturing info. In fact we should see early prototype around June, if not than we son't see them for Christmas.

Strangely, 2 more months from major OS release, and we don't hear a pep except some meager marketing info on Palm Inc. website. And they say the OS5.0 is targetted toward enterprise. Do they think enterprise purchasing decission happens over night? What's the big secret? So we definitely have time table problem here.

Guessing what will happen to current models.

-Sony NRV actually match the 6-9 months shelf life. (intro may - dead by November with introduction of OS50 devices)

-Treo, just limping along, competing with Samsung until unified telephone API is introduced in OS6.0. (Treo is pretty much dead if Microsoft subsidise any smarphone massively) That's why they hope to capture as much customer and lock it in 1 yr plan before June introduction of Microsoft product.

-Between now ntil November Microsoft has free reign on $400-650 models. Palm better think deep discount to keep market share.

RE: PalmOs 5 sufficiently un-enhanced functionality
Ed @ 4/3/2002 5:40:56 PM #
> Now if Palm is doing OS5.0 machine, we should rah-rah around August. mock up,
> hype, advertisement leak, manufacturing info.

Palm has committed to having an OS 5 device shipping before Fall. In fact, it and HandEra are the only Palm OS licensees who have officially said they would release an OS 5 handheld at all. Sony almost certainly will but it hasn't actually said anything about it.

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News Editor

Gartner

peter167 @ 4/3/2002 3:23:35 PM #
Tell us the market share of Palm's handhelds in the 1st quarter, if you dare.

******************
Lie is the future.

How dompare to NPD number

I.M. Anonymous @ 4/3/2002 3:48:39 PM #
Hey Ed,
How do these numbers compare to the NPD numbers that came out back in Feb? Does any of this make any sense?

RE: How compare to NPD number
Ed @ 4/3/2002 5:13:53 PM #
You may be confused simply because every study of handheld sales uses different criteria. The NPD Techworld numbers you refer to in February cover U.S. retail sales in 2001.

This study from Gartner covers worldwide sales and doesn't really try to break them down by manufacturer. The prediction covers all handhelds (or PDAs; the report uses the two almost interchangeably), whether Palm OS, Pocket PC, or another.

Because they cover such different areas, basically no cross-checking can be done.

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News Editor

Gartner gone soft?
I.M. Anonymous @ 4/4/2002 3:04:12 AM #
I find it odd that the gnomes at Gartner have not broken down sales between PPC and Palm OS. They usually do don't they? Usually quoting huge leaps in value of PPC sales and so on.

I wonder if this is an end to their pro Microsoft spin or perhaps there was no good news from PPC and they have decided to fudge things a bit?

Regards
Nick

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Let sleeping trolls lie

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