Handhelds Hit by Sluggish Demand

The worldwide market for handheld devices declined in the first quarter
of 2003 due to sluggish demand from businesses and consumers alike,
according to tech research firm IDC’s “Worldwide Handheld Qview.”

Despite new advances in handheld functionality and a drop in prices,
handheld devices just aren’t capturing widespread market share in the PC
marketplace, for consumers or enterprises, the firm said.

IDC’s quarterly roundup said worldwide shipments fell by 21.3 percent
from the first quarter of last year. Sequentially, shipments dropped by
26.5
percent from the fourth quarter of 2002 through the end of first quarter
this year, ending up at 2.45 million units shipped.

Ross Sealfon, research analyst in IDC’s Smart Handheld Devices program,
attributed much of the drop to a post-holiday slump in enterprise and
consumer spending that was intensified by the worldwide economic climate.

But there’s also a lack of a gee-whiz, must-have factor involved, he
said.

“Beyond the impact of seasonality, concerns of terrorism, war overseas,
and continued economic instability hampered device purchases. Despite the
availability of new, low- priced models and affordable, highly functional
models, handhelds offer limited appeal to the majority of consumers and
enterprises.”

For the most part, IDC said, aside from a surge in consumer purchases
around the holidays, clear consumption patterns for handheld devices have
yet to emerge among enterprises and consumers. As most enterprise customers
do not regard handheld devices as a key component of their IT
infrastructure, demand softens quickly as corporate IT budgets are cut.

In the consumer market, the report noted, handhelds are still viewed
primarily as luxury items, so if consumer confidence declines, expect a
decline in shipments.

In other highlights from the Qview report, Palm’s new $99 Zire model
helped it hang on to its leadership status with 36 percent market share
after it shipped 881,709 units during the quarter, nearly double the number
of handhelds compared to its closest competitor, HP.

However, sales of HP’s H1910 model, priced at $299, made the difference
in helping HP edge Sony out of the number two spot with 444,000 units
shipped compared to Sony’s 400,000. HP now has an 18 percent market share
compared to Sony’s 16.3 percent.

The report cited Dell’s strong selling quarter with its Axim X5 series,
priced at $199 and $299, and volume of shipments that tripled sequentially.

Handspring’s strategy of offering converged devices kept its sliding
pattern intact. The former market leader now has a 2.9 percent market share
of the handheld market and is ranked in seventh behind Casio and Toshiba.

Sharp, RIM and GSL rounded out the top ten list.

IDC defined handhelds as pocket-sized, either pen or keypad-centric, and
capable of synchronizing with desktop or laptop computers. Devices counted
did not include telephony but some did include wireless Internet access.

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