PDA Market Holds On in 2001

The market for PDAs, unlike its larger cousin the PC market, wrapped up 2001 with a strong fourth quarter and good numbers for the year.

According to preliminary data from Gartner Dataquest, worldwide PDA shipments in 2001 totaled 13.1 million units, an 18 percent increase from 2000. In the fourth quarter of 2001, worldwide PDA shipments increased 58 percent from the third quarter of 2001, but were down 2 percent from the fourth quarter of 2000.

“Considering the current economic conditions and the PDA market’s weakness shown in the previous quarter, the PDA industry performed surprisingly well in the fourth quarter,” said Todd Kort, principal analyst for Gartner Dataquest’s Computing Platforms Worldwide group. “Strong holiday season purchases were a big contributor to the sales upturn. Palm and Handspring’s average selling price fell to $165 as their price cuts continued and older inventory was pushed through the retail channel at low prices.”

Palm, which shipped more than three times the volume of its nearest competitor, continues to be the world’s leading PDA brand. But despite its lead in the industry, Palm’s market share in 2001 declined 11.8 percent from 2000 results. Compaq and Hewlett-Packard experienced the strongest growth rates of the top five vendors both worldwide and in the United States in 2001.

While there has been much focus in the industry between Palm and Microsoft, Gartner Dataquest analysts said the two companies have competed in separate segments of the PDA market. For potential PDA buyers willing to spend less than $400, the Pocket PC 2002 devices are not in the picture. They’ll look more to a Palm OS device.

“Today, only about 20 percent of the market is willing to spend $400 or more on a PDA,” Kort said. “Microsoft, Intel, Compaq and HP understand this and are fairly content to continue innovating with the expectation that prices will gradually come down and the platform will continue to gain adherents. They are also the only vendors making decent profits in this market today.”

Palm OS PDAs captured more than 57 percent of the worldwide PDA market in 2001, with about 7.5 million units shipped. Vendors of Microsoft Windows CE PDAs controlled nearly 21 percent of the worldwide market, up from about 11 percent in 2000. Proprietary OS devices, especially popular in Asian markets, comprised about one-sixth of the worldwide market.

According to Dataquest, the U.S. market accounted for nearly half of worldwide PDA shipments in 2001. The Asia-Pacific region surpassed Western Europe, with shares of 17.4 percent and 16.5 percent, respectively. Japan comprised about 8 percent of worldwide PDA shipments.

Dataquest analysts expect the story worth watching in the PDA market in 2002 will be the battle for the more profitable business segment. Gartner Dataquest analysts said approximately 80 percent of Windows CE-based PDAs are purchased directly by organizations or by individuals that are later reimbursed by their employer. Palm is expected to make a stronger push into this market later this year. Palm’s OS 5.0 and the ARM processors will offer the company an opportunity beginning in the second half of 2002 to significantly reduce the performance gap and compete strongly for corporate sales.

2001 Worldwide PDA Shipments
(Estimates, thousands of units)
Company 2001 2000 Growth (%)
Shipments Market
Shipments Market
Palm 5,056 38.6 5,588 50.4 -9.5
Handspring 1,648 12.6 1,369 12.4 20.4
Compaq 1,283 9.8 466 4.2 175.4
Hewlett-Packard 711 5.4 442 4.0 20.4
Casio 529 4.0 440 4.0 20.4
Others 3,884 29.6 2,777 25.1 39.9
Total Market 6,515 100.0 5,999 100.0 8.6
Source: Gartner Dataquest

Related reading