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Sony Ditches PDAs in Japan

Sony officially announced yesterday that it was ending production of its CLIE PDA product in Japan.

According to Gartner analyst Todd Kort, the end of Sony's PDA production in Japan was a forgone conclusion once the company withdrew it from all other geographies last June. Gartner estimates the Japanese PDA market accounts for fewer than 3 percent of worldwide shipments, with Sony shipping only about 125 thousand PDAs in Japan in 2004.

"It was not a surprise that Sony dropped the CLIE, because after peaking in December 2003 at 13 percent of the worldwide PDA market, CLIE sales had been falling rapidly," Kort told internetnews.com. "Sony as a whole had been losing money, and top management had to decide which businesses were going to be dropped."

Kort said Sony was likely outspending other PDA vendors on R&D, as well. Beyond the hardware itself, which included Sony's Memory Stick technology, Sony wrote a lot of its own software on top of the Palm OS in order to provide outstanding multimedia capabilities in its PDAs.

From late 2000 until the end of 2003, Sony introduced 30 PDA models by Kort's count.

"This was too fast, as customers who bought a new CLIE usually saw a new improved model at about the same price within six months after their purchase," the Gartner analyst said. "This caused considerable buyer's remorse among CLIE customers."

Sony's shift away from the PDA business may have begun as early as a year ago. "I believe Sony was losing money on their CLIE business and that most of the CLIE engineers began being redeployed to the Sony PlayStation and their phone business starting about a year ago," Kort said.

The Sony exit is also seen as part of the declining trend for Palm OS devices that rely on PIM (personal information management) functions. Recent reports on the state of the PDA market from both Gartner and IDC show a declining market share for Palm's devices and its OS.

"Palm OS PDAs have generally been more consumer-focused, and Palm largely delivered on their promise of simplicity and lower prices," Kort said. "But these same customers are now finding that the basic PIM functions of their Palm OS PDA are now available on many new phones."

"There has been a dramatic slowdown in new Palm OS PDA models being introduced over the last year, and the PalmOne Treo smartphone has become the logical upgrade path for most hardcore Palm fans," he added.

IDC projects that by 2008 the worldwide handheld market will ship 8.5 million units. while converged device shipments will hit 130 million units. IDC does not include PDA devices that include voice technology in its PDA handheld numbers. Gartner expects the PDA market to grow by 5 percent in 2005 to 13 million units.

"Beyond 2005, we expect that PDA shipments will be relatively flat to slowly declining, as smartphones mature and enterprise customers begin deploying smartphones in numbers equal to PDAs," Kort said.