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Hot off the Press News
by Chuck Brown

PDA sales skid in 2002, Palm still #1
February 10, 2003

2002 was not a stellar year for PDA sales and the year-end holidays buying slump didn’t help much either. The various manufacturers of PDAs, both Palm and Microsoft’s Pocket PC based, delivered to retail outlets only 12.1 million PDAs and other handheld types in 2002, down 9.1 percent from 2001, reported Gartner Inc’s Dataquest unit in a recent industry report.

“Much like in the PC business, corporations are still not buying as many PDAs as expected amid an IT spending crunch”, said Todd Kort, a principal analyst for Dataquest. “Business purchases of PDAs will climb when the industry figures out a better way to offer wireless data services, and resolves security issues to the content of IT managers.”

Still top market share holder, Palm Inc. had their shipments drop 12.2 percent at 4.44 million units in 2002, but Palm still shipped almost 3 million more units than its nearest competitor, Hewlett-Packard Co. That represents a 36.8 percent of the market for Palm, as compared to HP's 1.63 million units 13.5 percent of the market.

In third and fourth place were manufacturers that also use the Palm OS in their products. Sony Corp. had a strong growth of its Clie PDAs reporting a 163% increase from shipments of 506,358 units in 2001 to a total shipment of 1.33 million units in 2002. Shipments of Handspring Inc.'s devices dropped sharply to 698,228 units in 2002, down from 1.37 million in 2002 (sales of its Treo PDA/phone devices, which are considered smart phones, are not included.)

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Most analysts agree that the Palm based PDA format continues to be the most popular amongst buyer and users because of its reliability, ease of use and lower cost. While Palm’s new Tungsten T pushes the price envelope closer to Pocket PCs even with recent street prices of around $400, down from its original $499. MSRP; Palm's low-cost consumer Zire model has finally gotten the attention of first-time PDA users at only $99.

This explains Palm's OS based devices healthy market lead over HP's iPaq devices which are based on Microsoft Corp.'s Windows Pocket PC operating system, since 70 percent of all handheld sales are to consumers according to Dataquest 2002 study. While the MS Pocket PC operating system has seen most of its adoption by the enterprise business sector, the emergence of cheaper HP iPaq devices and Dell Computer Corp.'s new Axim PDA might help those P/PC devices to become more of a factor in the consumer market.

Toshiba Corp. posted the strongest gain among PDA vendors, shipping 450,298 of its Pocket PC-based units in 2002, up from an almost nonexistent 12,000 units in 2001. This despite dreadful reports of problems, terrible battery life and a 100% recall of the WiFi enabled Toshiba e740 Pocket PC.

Most analysts feel that more aggressive pricing of PDA products and similar handheld devices should help improve sales in 2003. However, we have heard that before too.

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