Sony Dumps Clie: Winners and Losers

Sony's handheld retrenchment prompts a look at who wins and who loses in the pocket-sized computer space.

So Sonys bagging the popular Clie line in the United States. At first glance, it seems like a terrible setback for Sonys small computer plans, and equally bad for PalmSource. But a closer look reveals that Sonys not getting out of the market for tiny computers—its just changing horses midstream. Heres a look at the big winners and losers, and what it means for you.

Loser: PalmSource

Anyway you cut it, this is a terrible blow to the folks behind the Palm operating system. The company has been assiduously courting OEMs and using Sony as an example of whats possible with the platform. Indeed, the Sony Clie devices were always the strongest Palm OS PDAs on the market—at least until the Tapwave Zodiac came out. Its not just a loss of prestige, either—Sony accounted for almost 15 percent of PalmSources revenue last quarter. Ouch.

Loser: Microsoft

Why would Microsoft be a loser here? One of the companys biggest competitors is abandoning the market, which should leave more for Big Green. Microsoft should pick up some market share, yes, but the Sony move indicates a decline in the standalone PDA market overall. This is less about Sonys relative strength in handheld computers, and more about a fundamental shift away from single-function pocket computers to PDA/phone combinations. And Microsoft and its partners, at least based on my tests of a recent smart phone, havent figured out how to make attractive and lightweight hybrids. In the end, Microsoft will get more, but itll just be more table scraps.

Winner: Ericsson

Sonys partnership with Ericsson has to be one of the biggest winners here. Ericsson was losing market share fast in the competitive handset arena until the two giants merged forces. And as phones and PDAs merge—its happening faster than you might think—this is a big boost for the combined company. So far Ive been underwhelmed by the companys flagship hybrid, the P900. Overpriced, fragile and expensive, it gets very little right. But Sony must have had confidence in products under development. This is very clearly a bet on phone-centric pocket computers, and away from the PDA-centered model.

/zimages/3/28571.gifClick here to read about analysts take on the announcement.

Next page: Focus on multimedia.