iPaq sales set to outstrip Palm

Sales of Compaq's iPaq handheld could overtake those of current market leader Palm when Spring sales figures are calculated, according to a new report.

Palm will still have a strong lead based on units shipped, but analysts at Gartner Dataquest expect it to lose its lead, based on revenue, to the iPaq.

The analyst predicts sales of $130m-$135m for the three months to the end of May for Palm, but as much as $200m for Compaq, which has a much higher average retail price, for its sales for the three months to the end of June.

Todd Kort, principal analyst at Gartner Dataquest, said: "As better wireless messaging capabilities have become available, many enterprises are considering large volume purchases of PDAs. Palm has little to offer such companies.

"Palm is well behind the competition in implementing each of these wireless technologies, and this lack of innovation is a big contributor to its declining fortunes."

Gartner said Palm was losing out to Sony and Compaq in the high-end consumer sector while Microsoft was making inroads into its share of the corporate market.

Ken Dulaney, research director at Gartner, added: "Palm remains a solid choice for enterprise use. However, users should not commit to any vendor beyond two years, at which time they should evaluate Palm devices against competing offerings."

He added that Palm must make significant changes to recapture high profit margins.