Handhelds Loosen Grip

Researchers say PDA device sales will continue to decline as converged mobile devices such as smart phones gain in popularity.

Handheld shipments dropped off in the first quarter, and researchers say PDA device sales will continue to decline as converged mobile devices, such as smart phones, gain in popularity.

According to market researcher IDC, of Framingham, Mass., worldwide handheld shipments last quarter fell 11.7 percent, to 2.2 million, from the same period a year ago. Gartner Inc.—which also factors sales of Research In Motion Ltd.s BlackBerry e-mail device into its market research—reports that worldwide PDA shipments dropped 4.6 percent in the first quarter, year over year.

IDC analyst David Linsalata said a number of factors were at play in the decline, such as increased saturation in the U.S. handheld market and competition from other devices, such as smart phones.

"The killer application of handhelds was, and is, PIM [personal information management], but with converged mobile devices moving into PIM, now instead of having two devices, you can do it all in one," 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.

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Analysts agree that while the consumer market for handhelds is slowing, there is opportunity for growth in the enterprise.

According to Gartner, of Stamford, Conn., about 32 percent of all handhelds were bought through the enterprise last year, but by 2008, that number will jump to 60 percent.

Gartner analyst Phil Redman said increasing sales of Pocket PC-based devices reflects a rise in corporate handheld sales. Shipments of Pocket PCs increased 4.6 percent in the first quarter from a year ago, Gartner officials said, while Palm OS devices dropped 20.7 percent. Redman said corporations often look to Pocket PC devices because the companies already have application developers familiar with Microsoft Corp. platforms in-house. In addition, Pocket PCs come with Microsofts Outlook, which many companies already use as an e-mail client.

However, Redman predicts that in the next few years, enterprises will look more toward smart phones.

"As voice-centric devices get more powerful [and] capable and as price comes down, in the next couple years most mobile professionals will have a smart phone," Redman said, adding that handheld PDAs with Wi-Fi or Bluetooth capabilities will survive more for data-centric purposes.

"You wont see any PDA without some kind of wireless capability in the enterprise," said Redman.

IDCs Linsalata said that for the enterprise, theres no one-size-fits-all device. "Different groups within the enterprise require different capabilities, different functions, so a range of devices is most appropriate," he said.

For example, "executives might simply need a device with voice capability, such as a mobile phone, and PIM functionality, to be reminded of appointments—here a smart phone, such as the Motorola [Inc.] MPx200, is more appropriate," Linsalata said. "Whereas employees who need a device that lets you manipulate more data but dont need voice capability might need a handheld. For example, tech support might find a PDA with Wi-Fi better so they can check server status anywhere over [an] 802.11 network. Sales reps who need PIM, voice and access to back-end applications might like a smart phone, like the [PalmOne Inc.] Treo 600, that blends voice capability with data functionality, such as a larger screen."

Linsalata said standardizing on one platform is more important with PDAs than with smart phones. "Smart phones interact more over cellular networks, with data interaction governed by thin clients and XML, which makes applications more platform-independent," he said.

Linsalata added that if IT departments dont arm their work forces with mobile devices, they should inform employees about what type of handhelds they will support. "You dont want employees with unsupported devices out there," he said.

According to Gartner, RIM saw the most growth among PDA vendors in the first quarter, with a 352 percent jump in shipments from the year-ago quarter. RIM, based in Waterloo, Ontario, has licensed its BlackBerry technology to PalmSource Inc., as well as to mobile phone providers such as Nokia Inc., Sony Ericsson Mobile Communications AB, Siemens AG and Motorola. Gartner said this will spur sales of wireless handheld devices in the second half of the year.

PalmOne, meanwhile, has teamed up with RIM competitor Good Technology Inc. to incorporate wireless messaging into the Treo 600 smart phone.

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