Casualties likely in PDA wars

Palm launched its latest PDAs, Tungsten, this week, amid news that low demand and high pricing had hit worldwide shipments of PDAs.

Handheld devices only managed a one per cent increase in the third quarter of this year. According to preliminary results from analyst Gartner, worldwide PDA shipments totalled 2.6 million units in the third quarter of 2002, a 0.9 per cent increase on the same period last year.

Shipments for the first three quarters of 2002 were down 8.3 per cent on last year, and Gartner indicated that the market will need an exceptionally strong shipment of PDAs in the fourth quarter for the industry to maintain worldwide growth in 2002.

Western Europe fared slightly better, with a return to growth during the quarter. PDA shipments totalled 495,000, a 15 per cent increase on the same quarter in 2001 and three per cent up on the previous quarter.

But Gartner warned that the growth is not as good as it appears, as the third quarter last year was particularly poor.

Palm, Hewlett Packard and Sony accounted for 58 per cent of all PDA shipments worldwide in the third quarter of 2002, according to the analyst.

Palm surpassed 30 per cent market share in the third quarter, while Sony and Toshiba showed the strongest growth in the period with increases of 280 per cent and 1,705 per cent respectively.

Toshiba is a relatively new market entrant, which explains the high initial growth rate.

For the first time, Microsoft licensees captured more than 30 per cent of worldwide PDA shipments, up from 16.2 per cent in the third quarter of 2001.

Palm and Sony, along with Handspring and a few other Palm OS licensees comprised almost half of worldwide PDA shipments in the third quarter of 2002, the same as the third quarter last year.

Gartner analyst Roberta Cozza, said: "Some of these devices are still quite expensive and, with the current economic situation, adoption has been slow.

"Many vendors cut prices during the quarter to get rid of old inventory and make way for new devices for the holiday season, and this generated some demand.

"However, there is increased price pressure in this market and there is a need for a lower cost device.

"Dell will enter the market at the end of the year and this will bring further price pressures. It is good for users as prices will go down, but other vendors will need to renew their strategies.

"In Europe this will result in some players exiting the market."