RealTime IT News

Palm OS Holds The Line

In the wake of declining handheld shipments throughout 2002, Palm subsidiary PalmSource, which maintains the OS side of Palm's business, claimed it garnered share in the second half of 2002.

On Monday the handheld giant said just-released sales figures showed Palm making "strong share gains" in European retail sales over figures from a year ago, while "in the U.S., Palm Powered handhelds maintained share despite increased competition."

Palm cited figures from a number of research firms to back up its claims. It noted the October-November 2002 sales report from GfK Marketing Services, which showed retail share in Germany rising from 50 percent to 58 percent. The report also showed Palm Powered devices gaining ground in France (rising from 52 percent to 64 percent), and the U.K. (from 42 percent to 50 percent). GfK attributed much of the rise to PalmSource licensees releasing new products equipped with Palm OS 5, the latest version of the Palm operating system.

In the U.S., Palm did not see a gain, but managed to hold onto the 80 percent share it boasted during the December 2001 holdiay period, according to weekly retail sales figures compiled by NPD Intelect in December 2002. Palm hailed that result, noting that the 2002 holiday season saw the introduction of lower-priced handhelds and increased promotional spending by licensees of rival operating systems.

Palm also cited NPD Intelect's results as proof of large gains in the U.S. enterprise resellers market, with third quarter 2002 figures showing Palm Powered handhelds taking 72.9 percent of the market, up from 56.7 percent in the year-ago quarter.

Still, in November, International Data Corp. (IDC) said that a survey of about 1,000 members of its Mobile Advisory Council showed that while Palm OS remained entrenched in the healthcare, education and government vertical markets, Microsoft's Windows CE/Pocket PC is now the preferred platform for mobility solutions within field sales/service and utilities segments.

IDC noted that professional services and manufacturing segments are important targets in the war for the enterprise market because they are key implementers of mobile technologies and solutions. The firm also said enterprises want to ensure that mobile applications enable employee access to existing office applications like e-mail and word processing -- a factor which may put the advantage in Microsoft's court, with its domination of the office productivity suite market. Finally, IDC noted that the battle for the space may come down to the extension of CRM applications to mobile workers -- a move likely to win converts in the insurance, banking and telecommunications segments.

"Vertical markets tend to be earlier adopters of mobile technology and mobility solutions because they tend to take advantage of functions that are offered," Randy Giusto, IDC vice president of Personal Technology and Services, said in November. "These markets are a major force in driving the extension of CRM applications to mobile environments, as well as the adoption of wireless networks."

The research firm also noted that Palm's OS division held an 89 percent share of smart phones in the US during the third quarter of 2002. In fact, IDC's stats suggest that three of the top six worldwide smart phone vendors' products were Palm Powered -- Handspring and Treo 300; Kyocera's 5135 Palm Powered flip-phone; and Samsung with its i330 smart phone. Other major players using Palm's smart phone include Alphasmart, with its Dana device and the Sony Clie NX 70v.

In the next three months, Palm is banking on some new contracts in the first part of 2003 to boost its sales and market share including Fossil's Wrist PDA with Palm OS, Garmin's iQue 3600 GPS-enabled handheld, the Legend Pam168 Chinese-language handheld, and the Sony Clie NZ90 with a two megapixel camera.

Enterprises Are Slow to Purchase PDAs

Despite Palm's market share fanfare, shipments of handheld devices for business use only totaled 12.1 million units in 2002, a 9.1 percent decline from 2001 results, according to preliminary results from Dataquest.

"We estimate that about 70 percent of all PDAs are purchased by consumers and only 30 percent by enterprises," said Gartner Dataquest principal analyst Todd Kort. "The more lucrative enterprise market has been stagnant because of poor economic conditions and a perception that PDAs are not yet capable of delivering sufficient return on investment. The enterprise market is still another year away from embracing PDAs."

Kort also told internetnews.com that an influx of proprietary operating systems from China make up 90 percent of the rest of the handheld operating system marketplace after Palm and Microsoft CE. Linux-based ones only make up a miniscule amount at this time. Palm OS shipments totaled 6.7 million units, which represented 55.2 percent of worldwide shipments. Windows CE totaled 3.1 million units, which accounted for 25.7 percent of all PDA units.

"Ninety percent of Chinese PDAs are under $200, so it will take a while to see whether Palm will be able to make an impact with its partnership with Legend, Kort said. "Keep in mind that Palm, HP and Handspring each lost 600,000 units apiece last year. Sony and Toshiba picked up some of that slack, but this is a developing phenomenon. Now with Dell and its $199 Axim model, the field is now becoming very competitive."

Kort also said lack of significant progress in wireless PDA technologies has also resulted in some companies waiting to purchase these devices.

"Wireless infrastructure is still immature, and wireless data security issues have not been fully resolved," Kort said. "End users still have too many hassles getting wireless devices properly configured. On top of this, wireless data speeds are typically much less than advertised, and costs per megabyte are relatively high, especially in the United States."

Editor's note: internetnews.com Senior Editor Michael Singer contributed to this report.