Do Handhelds Have a Future?

The decline of PDAs is a boon for new technologies-and Post-its.

Rats. I finally get around to buying a handheld computer, and I start seeing headlines like "Is the PDA dead?" I should have seen this coming. We covered the news this month that Sony is halting production of its Clié line of handhelds for the rest of the year—and maybe for good. The announcement came in the wake of market research that shows declining PDA sales for the second consecutive year.

According to Gartner, this years sales should be about 11.4 million units, down from 11.5 million in 2003 and from a little more than 12 million in 2002. By 2008, those shipments are supposed to fall to 4.5 million.

Precipitating the downward spiral are, among other factors, smart phones, or converged phone/handheld units. IDC forecasts that about 4.5 million smart phones will ship in the United States this year—by 2008, that number will jump to 35.3 million. In fact, Sony, along with its partner, Ericsson, is halting its conventional PDA business to focus in this area. This makes sense. Overall, phone sales worldwide are up 34 percent in the first quarter of this year, to 153 million units, over the same quarter last year. Gartner predicts 600 million units will be sold this year.

If the handheld business does grow, it will come from the enterprise. Gartner also reports that by 2008, 60 percent of handheld sales will come from business, up from 32 percent last year.

OK, the markets slowing, but dying? Im not typically on the leading edge of gadget-adoption curves, except maybe for MP3 players. I have long planned to get a PDA, but I never suspected Id be getting in on the downside.

I did have plenty of good reasons to wait. First: cost. I wanted features, but I was not willing to pay $500 to $600 for a high-end iPaq from HP. I also wanted built-in Wi-Fi support, but lower-end models didnt support it, or they offered only add-on wireless capabilities. Second: There was no need. I usually had no problem keeping track of my tasks and calendaring—the major purpose of a PDA—in my head. If there was a lot going on, I could use scraps of paper, aka Post-its. I also rarely, if ever, put anything in my Outlook calendar.

In recent months, prices have started coming down to more acceptable levels, low enough for me to consider jumping in. Also, I became aware of another worrisome trend: My memory is no longer what it used to be, at least when it comes to remembering dates and appointments. I have found myself writing things down more, but when away from my office, I was without my scraps.

The little calendar in my cell phone worked in a pinch if I really, really needed to remember something, like those flowers for my wife on our anniversary. Not wanting to upgrade my cell to a smart phone, it became time for a handheld. Dells new Axim X30 was the answer. It features built-in Wi-Fi at a low price ($249), and I tacked it on to a laptop order for my wife.

/zimages/5/28571.gifClick here to read PC Magazines review of the Axim X30.

But now, just as the death of the PDA is upon us, Im faced with another problem. As this column goes to press, Im still waiting for my handheld. My wife has had the laptop for two weeks, but I am still waiting for my Dell. Have I found the one weak spot in Dells build-to-order universe? Its not like Dell has to customize the thing.

As I wait, I worry that Im getting further behind the times. Should I have waited just a little longer and gone the smart-phone route, or would I have just been getting sucked into another marginally useful gadget?

Asking around, I found a friend who is taking a novel approach. Shes done with PDAs since her second one, a Palm Zire, died. "Im thinking about just getting another Day Runner," she said. Going retro is "faster, and, for me, all I need it for is calendar and tasks—and no worries about the battery going dead or losing my info. Id rather read my chicken scratches."

What does this mean for the rest of us? If handhelds were a stock, Id say its time to sell. As for smart phones, too soon to buy; wait and prices will fall further. In the meantime, invest in some more pencils—and Post-it Notes.

Scot Petersen can be reached at

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Scot Petersen

Scot Petersen

Scot Petersen is a technology analyst at Ziff Brothers Investments, a private investment firm. Prior to joining Ziff Brothers, Scot was the editorial director, Business Applications & Architecture,...