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Disclaimer: Dell, Hewlett-Packard, IBM and Microsoft all are clients of mine.
Last week, while I was on vacation, Sony dropped out of the U.S. and European handheld markets. Theres some doubt whether the company will continue even in Japan.
PalmOne has emerged as the dominant vendor in this declining segment, and even Microsoft doesnt seem to be aggressively supporting it anymore.
But RIM has been growing in high double digits, Good Technology has acquired massive additional funding, and Danger cant build enough Hiptop products to come close to meeting demand.
Frankly, Im getting tired of pointing out that a handheld computer that isnt connected solidly to a WAN service provider is trending to be a doorstop. This was brought to a point today when I met with Danger and spoke to PalmSource on the phone.
PalmSource is increasing its concentration on smart-phone platforms for growth, and Danger had generated more demand than its current manufacturer can handle.
Both see the powerful, emerging smart-phone market as the next big thing. According to the literature packed with new copies of Microsoft Office, Microsoft appears to concur.
Next page: Dangers the one to watch.
Watching for Danger
But while we often talk about Microsoft, RIM and even Good, we dont spend much time with Danger, and that company is doing too well to ignore.
Danger makes the Hiptop smart phone, which is marketed by T-Mobile in the United States (T-Mobile currently has the most aggressive data plans) as the Sidekick.
This product is targeted at the consumer segment right now, but it is clearly trending toward the SMB (small to midsize business) space. For example, Oracle has brought a large number of them onto its campus to explore the products potential to move new Oracle database solutions.
While the Sidekick accounts for only 1 percent of T-Mobiles phone sales—which are currently manufacturer-constrained— it accounts for 10 percent of the data revenue, which is why it is gaining popularity in Asia and Europe.
What makes the Danger Hiptop/Sidekick so different in a market that most think is dominated by RIM is the companys focus on the consumer segment, as opposed to the enterprise customer.
Next page: Beware the rocky shoals of the enterprise.
Rocky Shoals
Moving into the enterprise market can take decades. Many, such as Netscape, have failed so dramatically in the attempt that they ceased to exist in the process.
After years of driving into the enterprise market, RIM remains dramatically smaller than PalmOne, even though RIM has had a better e-mail solution. And after all, e-mail is thought to be one of the killer applications for a handheld computer.
RIM is attempting to penetrate the consumer market, but the progress has been all but nonexistent, suggesting that it is easier to move up than down in these respective markets.
Of course, we should remember that Palm and a little company called Microsoft started close to the user. Both companies established their dominance there before moving to the enterprise. This gave them a strong base and resulted in their becoming powers in the consumer segment before they became true enterprise vendors.
Im increasingly becoming convinced that the consumer PC market—be it handhelds, PCs or accessories—is a necessary foundation if you are going to make a play for, and sustain, a corporate market in the same class of products.
IBMs ex-CEO listed “getting out of the consumer market” as his biggest mistake: a mistake that reduced the IBM PC company to a fraction of the market share enjoyed by Dell and HP, which both stayed in that segment.
Logitech, which remains firmly locked into both market segments, is considered the dominant player in its segment of PC accessories.
Right now, RIM and Danger are both moving from total solutions vendors to technology vendors. My sense is that the one that gets both consumer and business first will own the market, and it may turn out that the consumer segment is more important than the business segment once again.
If that is true, then Danger is the company to watch, and RIM should do the watching. Good Technology could, by partnering or merging with Danger, become the element that makes the difference.
Then again, Danger is currently hampered by manufacturing-resource issues. Were the company to get a solid, branded hardware manufacturer as a partner, it likely would merit attention. Watch this space: Things are about to get really interesting.
Rob Enderle is the principal analyst for the Enderle Group, a company specializing in emerging personal technology. Full disclosure: One of Enderles clients is Microsoft as well as Advanced Micro Devices, Dell, Gateway, Hewlett-Packard, IBM, Intel, Transmeta, VIA and Vulcan. In addition, Enderle sits on advisory councils for AMD, ClearCube, Comdex, Dell, Hewlett-Packard, IBM, Intel, Microsoft and TCG.