Slowdown Reaches PDA Sales

Retail unit sales of personal digital assistants (PDAs) in the United States grew by 11.9 percent in August 2001, according to NPD Intelect. That’s a far cry from the 207.5 percent increase in unit sales in August 2000.

The 11.9 percent growth in August was the worst growth performance of the year, even though average selling prices have fallen to $248 from $283 the year prior.

The unit market share for Palm OS-based PDAs remained stable in August with 82.5 percent of the retail market, but dollar share for Palm devices fell slightly, to 78.5 percent in August as average prices dropped to $236 from $254 in July. Pocket PC-based products, on the strength of aggressive price cutting, grew from 10.2 percent of sales in July to 13 percent in August, a two-year high. Pocket PC manufacturers, in preparation for the introduction of the new Pocket PC operating system in early October, began cutting prices sharply, with selling prices falling to $380 in August from $470 the month prior.

“Despite the modest unit increase, August was not a blockbuster month for handhelds,” said Stephen Baker, senior hardware analyst for NPD Intelect. “Unit growth appears to be driven by substantial price reductions taken by both Compaq and Handspring, and not by seasonal factors.”

Reasons for Purchasing One PDA Over Another
It’s a brand I trust 31.0%
It has the latest technology 19.5%
Product had the features I wanted 12.9%
Recommended by a friend or relative 10.3%
The brand is a good value for the money 10.0%
Source: NPD Online Research

Palm led the market with a 51.2 percent market share, but that was its lowest of the year. Handspring and Compaq gained ground with aggressive pricing tactics and Sony’s increasingly diverse product line performed very strongly. The Palm M100 was the best-selling handheld for the fourth month in a row and the top four models were all from Palm.

NPD also released data from its online of 600,000 panelists, which found that more than 70 percent of PDA purchasers were men between the ages of 25 and 54. The survey also revealed that brand was the No. 1 factor in deciding which handheld to purchase.

“This reaffirms advertising efforts by manufacturers to focus on brand when touting their products,” Baker said.

A report from the Aberdeen Group’s Information Appliances practice predicted that the PDA market will reach $6.6 billion by 2005 with approximately 39 million units shipped. But the focus of the market will shift away from individual consumers in the future.

“Although PDAs have enjoyed great success in the consumer market to date, enterprise purchases will be the chief driver of growth moving forward,” said Aberdeen report author Isaac Ro. “To that end, Microsoft’s Pocket PC operating system stands well positioned to emerge as the leading handheld platform by 2005.”

Handheld Unit Share and Average Selling Price
Unit Share Average Selling Price
Aug. 2001 Growth vs.
Aug. 2000
Aug. 2001 Growth vs.
Aug. 2000
Palm 51.2% -16.7% $242 -12.0%
Handspring 19.5% 14.9% $194 -15.7%
Sony 10.4% N/A $275 N/A
Compaq 8.3% 28.5% $418 -15.7%
Casio 4.3% 177.9% $132 -45.5%
Source: NPD Intelect

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