The American publics scaled-back travel plans could not have come at a worse time for the handheld market. Without a highly mobile work force, the need for handhelds fall off a cliff.
"Our worst pre-Sept. 11 scenario is now our best-case scenario," says International Data Corp. analyst Kevin Burden. Indeed, IDC has scaled back its projections for the handheld for this year and next.
But lets keep the market in perspective because it still should grow at a healthy clip. For instance, IDC predicts sales next year will be about 9 million units, a third more than this year, although the forecast for 2002 was once at 9.8 million units.
The Framingham, Mass., research firm now projects between 5.3 million and 6.1 million handhelds will be sold in North America instead of its original forecast of 6.4 million. "We still dont know what the fourth quarter is going to look like," says Burden.
The 5-year-old handheld market, started in earnest by the Pilot 1000 and Pilot 5000, closely mimics the exploding PC market of 20 years ago. IBM sold 200,000 PCs in its first year, a small number today but beyond Big Blues wildest expectations at the time. IDC projects about 130 million PCs will be sold worldwide this year in a decelerating market. By 2005, the figure will jump to 191.2 million PCs sold worldwide.
And the winner is …
Take this parallel up a notch. It took Microsoft about a dozen years, in its stormy partnership with IBM, to drive Apple out of the enterprise, which it dominated in the early days of personal computing. So is it just a matter of time before Palm, which according to IDC still retains 64 percent of the handheld market today and 60 percent enterprise share, is overtaken by Microsoft?
"It looks like Palm has a commanding lead, but how long can that last? Palm has to be in the enterprise, and thats where it is going to face its stiffest competition. Its very difficult to go after both those markets," says Burden.
But if its all about "developers, developers and developers," as Microsoft CEO Steve Ballmer shouted in a speech recently, the humorous video of which made the rounds on the Internet, Palm has already won. It claims that 140,000 developers are using the Palm OS. Ballmer in introducing the Pocket PC 2002 Thursday, said Pocket has 3,800 developers.
Something tells me the disparity isnt nearly that wide. Check back when Ive had a chance to find out how each side counts "developers, developers, developers."
For the next several years, it will not be a zero sum game for Microsoft and Palm. They will co-exist because the handheld market will almost certainly accelerate faster than the PC did in the early days. After all, handhelds are far cheaper, with prices dropping every day. Increasingly, they will supplant PCs as they become richer in features and more wireless-capable. Pocket PC 2002 is proof of that.
For now, though, the Pocket PC is taking the biggest hit from downturn-ravaged IT budgets, Burden says.
At the end of 2000, Microsofts 10.7 percent enterprise market share was forecast to grow to 30 percent, which, Burden says, "did not happen." IDC has also pared back overall Microsoft share to a range of 15 percent to 20 percent from 20 percent to 25 percent.
To Microsoft, this is just a small bump in the road, for it can outlast any competitor on any front with the possible exception of its old nemesis, IBM. The events of Sept. 11 also take the Feds spotlight off Microsoft, and Im not sure regulators have the fire anymore to impose sterner measures than the company would willingly agree to (the first warning sign that its just a wrist slap will be Microsofts acquiescence). Whats more, Microsoft has attained American icon status, and the company is in vogue today.
So the battle continues, with the fallout from Sept. 11 as the wild card. The strongest signs the freeze on handheld sales is thawing will be the restoration of airline ticket sales and hotel reservations.
John Dodge is vice president of news for Ziff Davis Media and an eWEEK editor at large. He welcomes feedback at [email protected]