RealTime IT News

Intelligent Phones Take Bite Out of PDAs

By Ron Miller

Worldwide PDA shipments declined last year as consumers turned to intelligent phones combining a mobile handset and a personal information manager (PIM), according to a pair of research reports just out.

"Smart and enhanced phones will primarily be a consumer purchase in 2004 and will erode the low-end of the PDA market as many individual users find the PIM and e-mail capabilities of smart phones acceptable," said Todd Kort, principal analyst in Gartner's computing platforms group. ("Smartphones" as one word, which were not the focus of the study, are a Microsoft-branded mobile-phone operating system.)

Total PDA shipments dropped 17.9 percent in 2003, market analysts IDC found. Gartner Group reported a smaller drop off of only 5.3 percent. The difference resulted from the choice of devices counted in the respective surveys.

A major contributor to the PDA decline was a 30 percent drop in shipments in the Asia/Pacific region. Kort said the Chinese PDA market collapsed entirely. "Low-end PDAs were sort of a fad in China in 2001," he said. "Now, these PDAs are no longer considered to be cool, as people have moved on to other devices such as digital cameras, so PDA sales have declined substantially in that region."

In Japan, there was never very much interest in PDAs. "The Japanese were always into phones," Kort said.

According to Gartner, Research In Motion, the makers of the PDA-plus-telephony Blackberry devices, was one big winner in 2003. The company surged at the end of year, matching their entire 2002 shipment numbers in the fourth quarter. Even though 35 to 40 percent of that increase was via upgrades from older devices, overall shipments increased 121 percent last year--the largest among top-tier vendors.

In straight PDAs, Palm continued to maintain the lion's share of the overall handheld market with 36.4 percent. However, that share was down from 42.5 percent in 2002, an overall decline of 19 percent.

With its purchase of Handspring last year, Palm may be well positioned to capitalized on the rising popularity of increasingly intelligent PDAs. "Smart phones are an extension of this category, and the primary reason we bought Handspring is to include the Treo family into our portfolio," said Marlene Somsak, a vice president at PalmOne.

Other PDA manufacturers are also expected to find ways to adapt. "Going forward, handheld device vendors must continue to differentiate and expand into hot product categories, such as media players and digital cameras, to renew growth in their market," said David Linsalata, analyst in IDC's mobile devices program.

Gartner's Kort agreed. "The PDA vendors are going to be a step ahead in terms of more memory, larger and better displays, more powerful processors, and better connectivity to back-end data bases," he noted. "These are the things that will continue to distinguish PDAs from phones."