Analysts: Sonys Clié Pullback Jibes with Forecasts

Industry analysts said they werent surprised by Sonys announcement Tuesday that it will halt production of all Clié handhelds in the United States for the rest of this year, citing increasing competition that traditional handheld devices face from smart phones and other products.

“The handheld market in the U.S. is declining and hitting a rough patch,” said IDC analyst David Linsalata, in Framingham, Mass.

“With saturation of handheld devices in the market, competition is very tough as converged devices are growing strongly. The PDA really hasnt been able to redefine itself from the PDA of the 1990s to the PDA of 2000,” Linsalata said.

IDC forecasts that about 4.5 million smart phones and 4.9 million PDAs will ship in the United States this year but that by 2008, the number of smart phones shipping will jump to 35.3 million, while PDAs will drop to 4.5 million.

/zimages/4/28571.gifClick hereto read more about Sonys decision to halt production of Cliés.

Gartner analyst Todd Kort said Tuesdays announcement—in which Sony Corp. said it is taking the time to reevaluate the PDA market—is most likely a signal that the company is exiting that market for good.

According to Kort, in Stamford, Conn., Sonys success in the handheld market has largely been in the consumer space, which has been declining while enterprise sales are growing.

“Sony doesnt have the services and support infrastructure for enterprise clients,” Kort said.

Although enterprise sales accounted for only about 30 percent of all handhelds bought last year, Gartner predicts that number will jump to 60 percent by 2008.

/zimages/4/28571.gifClick hereto read Jim Louderbacks take on who wins and who loses because of Sonys change in direction.

Tuesdays announcement comes as a blow to PalmSource Inc., as Sony trails behind only PalmOne Inc. in sales of PalmSource OS-based devices. Sony officials said in a statement that “our financial investment in PalmSource remains unchanged. Sony continues to view Palm OS as an important flexible operating system.”

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