Palm Dips, Yet Maintains Lead

Worldwide handheld shipments increased 18 percent last year as Palm-branded devices lost significant market share but still hold a substantial lead, according to a market study released Wednesday by Gartner Dataquest.

In addition, while Santa Clara, Calif.’s Palm
lost market share in the U.S., the picture isn’t as bad for the handheld vendor as it is in the rest of the world. However, the report shows significant gains, both in the U.S. and worldwide, for handhelds based on Microsoft’s
Pocket PC handheld, particularly those developed by Compaq .

This latest study echoes the results of one released earlier this month by Cahners In-Stat/MDR, which said that handheld shipments grew 17 percent in 2001.

Despite difficulties late in the year, worldwide handheld shipments increased 58 percent in the fourth quarter of 2001 compared to the quarter before, according to Dataquest. Even at that, however, overall shipments were down slightly — about two percent — from the same quarter the year before.

“Considering the current economic conditions and the PDA market’s weakness shown in the previous quarter, the PDA industry performed surprisingly well in the fourth quarter,” said Todd Kort, principal analyst for Gartner Dataquest’s Computing Platforms Worldwide group.

Overall, the Palm OS still holds a commanding lead worldwide over Microsoft’s Pocket PC, according to Dataquest. Palm-branded devices remain the leader, by far, with a 38.6 percent worldwide market share. Handspring, which also is based on the Palm OS, was in second place worldwide with a 12.6 percent market share. That represents only a slight improvement for Handspring and a significant drop for Palm-branded handhelds, which had a 50.4 percent market share in 2000.

Third-place Compaq more than doubled its worldwide market share, increasing from a 4.2 percent share in 2000 to a 9.8 percent share in 2001. Hewlett-Packard, in fourth place, increased its market share from 4 percent to 5.4 percent while Casio’s market share was unchanged, remaining at 4 percent for both 2001 and 2000.

In the U.S., Palm’s market share slipped only from 58.7 percent in 2000 to 47.1 percent in 2001. Handspring’s market share slipped less than one-half. Combined, those two vendors had a 66.8 percent U.S. market share. Compaq increased its U.S. market share from 4.2 percent to 8.7 percent and Hewlett-Packard increased its share from 3.5 percent to 5.9 percent. Research in Motion maintained a 6.6 percent market share in the U.S.

The study claims that price played a significant factor for Palm maintaining its lead. Palm-based devices are less expensive than Pocket PC devices.

“Today, only about 20 percent of the market is willing to spend $400 or more on a PDA,” said Kort. “Microsoft, Intel, Compaq and HP understand this and are fairly content to continue innovating with the expectation that prices will gradually come down and the platform will continue to gain adherents. They are also the only vendors making decent profits in this market today.”

The study predicts that the biggest battle in 2002 will be for business users, where Windows CE-based devices have done best.

Dave Haskin is managing editor of The original source for this story is here.

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