Global PDA retail revenues will increase five-fold by 2006 as unit shipments pass 85 million units, according to research by Strategy Analytics.
PDA vendors have reached what Strategy Analytics calls a key turning point, where the early adopter organizer and office companion market has been targeted, but the true volume from the mass market has not yet emerged.
“Fifty percent of global cellular data revenues will be generated from messaging applications and services, in 2006,” said Chris Ambrosio, senior analyst in the Strategy Analytics Global Wireless Practice. “The PDA has a number of advantages that put it in a position to be the best device for utilizing these services. Success depends on PDA vendor ability to position the PDA as the device of choice for end users.”
Consumers interested in buying a PDA or upgrading to a more advanced model will also have more choices, not only among models, but among manufacturers as the market matures.
“A third generation of PDA and handheld devices is about to hit the market with improved functionality and greater consumer market appeal,” said David Kerr, vice president of the Global Wireless Practice at Strategy Analytics. “However, the early success of Palm and PocketPC vendors has encouraged bigger fish to enter the market. The inevitable result will be bruising competition, negative pressure on margins and a critical need to differentiate products in the marketplace.”
The Strategy Analytics study also found that the consumer market will drive PDA shipments in 2006, and that the Palm OS will lose market share to Pocket PC through 2006, yet will retain its global dominance.
But the PDA market is also immature, and the economic slowdown that has haunted the high-tech industry for much of the past year has taken its toll. The Western European PDA market experienced slow shipment growth during the second quarter of 2001, as unit shipment increased 7.1 percent over the second quarter of 2000, according to Gartner’s Dataquest Inc. In 2000, the Western European PDA market grew 123 percent as shipments surpassed 2.1 million units.
“After years of strong growth, the Western European PDA market came to an abrupt hold this quarter,” said Thomas Reuner, an analyst with Gartner Dataquest in London. “High inventory levels that characterize a still immature market came back to haunt most vendors. These problems were exacerbated by badly managed product transitions and insecurity about how the wireless future will shape up.”
Palm narrowly maintained the leading position in the Western European market, despite a 41.9 percent decline in market share. Compaq was the strongest performer and profited from a clear focus on the enterprise sector and a dramatic increase in supply chain capacity. Psion reached the No. 3 position despite a strong decline, but it also announced it was withdrawing from the consumer PDA segment, which indicates the increasing competitiveness of the market.
Among handheld operating systems, Microsoft achieved the highest growth rate in Western Europe with a 226 percent increase, but this came on the back of a very low base as PocketPC was launched in the second quarter of 2000.
“Although new market entrants will intensify competition, the market is caught between a lack of new product features and the anticipation for the uptake of wireless applications,” Reuner said. “We expect to see the market pick up significantly in the middle of next year, once GPRS comes in at affordable prices. As with the rest of the IT sector, the PDA market will continue to be influenced by the deteriorating economic climate and the downturn of the telecommunications sector.”
Research from the Aberdeen Group predicts that Microsoft’s PocketPC will eclipse Palm as the leading handheld operating system by 2005. Aberdeen expects overall handheld sales to grow by 30 percent a year through 2005, bringing total sales to 39 million units. By comparison, about 8.9 million handhelds were sold in 2000.
The greatest competition in the handheld market will be for sales into the enterprise, which are just now starting to ramp up. That is where it Aberdeen expects PocketPC handhelds will have their greatest success against Palm-based handhelds. PocketPC has an advantage for enterprises, including tighter integration with band-end systems, which will lead to more custom applications. It also claimed the Windows CE kernel is more robust and secure and that Microsoft will surmount usability issues and make PocketPCs easier to use.
As a result, Aberdeen foresees PocketPC dominating the enterprise with as much as three times the penetration into the enterprise as Palm-based devices.
internet.com’s AllNetDevices contributed to this report.
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