Shipments of handheld devices in Europe grew eight per cent in 2001 in a market that is set to soar this year, according to market research firm IDC.
"The future looks good and wireless will grow in 2002. The next big thing for the channel will be devices that carry the PocketPC which will increase sales," said Andy Brown, an analyst at IDC.
The research found that strong double digit growth was evident among vendors using the PocketPC operating system because companies using it, such as Hewlett Packard and Compaq, have cut prices to clear inventory.
"Most PocketPC-based vendors clearly employed price cuts as a strategy to shift existing stock in order to make way for Pocket PC 2002-based devices," said Brown.
Rob Orr, business development manager at wireless distributor Portable Add-ons, said: "We believe that, because of the enhancements of the features on PocketPC 2002, it has now become a true extension of enterprise IT systems."
He explained that these extensions include support for terminal servers, and security enhancements with developments from companies such as Xcellenet.
Despite Palm's continued market leadership, its operating system declined by about 40 per cent year on year as Microsoft's offering grew to account for about 35 per cent of the market.
Brown pointed out that eight per cent growth for 2001 was adequate, considering the difficult year for the industry when a lot of wireless projects were cancelled.
"Handhelds are now becoming an increasingly important part of mobile portfolios and the channel will see a big push for mobile devices," he said.
Vendors offloading products by flooding the channel has had an artificial impact on sales figures, and the fourth quarter of 2001 actually showed a 30 per cent drop compared to the same period the previous year.
Flooding the channel led to lower sales in the first half of 2001 because vendors spent the time recovering from doing the same thing in the final quarter of 2000.
"Although the 30 per cent decline looks negative you should take into account that, during the same period last year, vendors shipped a lot of products into the channel," said Brown.
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