Windows Mobile Surging in Euro PDA Market

The European PDA market is showing signs of growth again after a three year lull and Microsoft is gaining market share in the process, according just-released figures from market
researchers IDC.

The stats are further proof that many sectors of the technology industry emerged from the technology recession during 2003.

Preliminary data pegged PDA shipments in Europe at 2.6 million units last year, up 27.5 percent from 2002. The 2003 rise was driven by a particularly
strong fourth quarter, which totaled shipments of 958,000 units, a 38
percent increase compared to the year-earlier period.

For Microsoft , the market figures held even better news. PDAs running Windows Mobile systems software surpassed Palm OS-based devices for the first time.

Windows Mobile snagged a 59.6 percent European share, with 571,000 devices shipped, compared to 38.9 percent and 373,000 units for Palm OS. (Microsoft’s PDA operating system, long called “Pocket PC,” was officially rebranded last year as “Windows Mobile for Pocket PC.” Both names are in common usage.)

Linux-based devices made by Sharp and Casio took up the rear with a 1.5 percent share, according to IDC.

Windows’ advance was helped mightily by the popular iPaq handheld line from Hewlett Packard , which surged ahead as the single largest European PDA vendor in the fourth quarter with a 36.9 percent share and 354,000 devices shipped. However, that pace wasn’t enough to push HP up from second place for the entire year, with 810,000 units overall and a 31.7 percent share.

Even with its popular Zire and Tungsten models, Palm , barely retained the top hardware spot for 2003 with 826,000 units and a 32.3 percent share. , though it slipped to second in the fourth-quarter results with 30 percent and 288,000 units.

Moving forward, it’s anything but clear whether Windows’ newfound edge over Palm in European markets could foretell a similar advance in the United States. “Looking at the United States versus Europe, in terms of IT decision makers, Palm still has a stronger perception among business users than Pocket PC. The reverse is true in Europe,” Andrew Brown, program manager for mobile devices at IDC [and author of the new survey], told

Michael Gartenberg, Jupiter Research vice president and research director, said Palm still has a healthy market share in the U.S.

“We see Microsoft as a distant second over the next four years, based on the fact that Palm’s PIM (personal information manager) functionality is significantly better,” We see Palm OS as still leading the market over Pocket PC,” Gartenberg said.
(Jupiter Research and this publication have the same corporate parent.)

But price appears to have been the significant market mover in Europe, IDC’s Brown continued.

“We’ve seen the market evolve from Psion to Palm and now we’re seeing Pocket PC/Windows Mobile start to dominate due to the massive drop in price [of Windows PDAs],” said Brown. He points to Medion, which doesn’t offer its PDAs for sale outside Europe, as a low-end driver with 97,000 units shipped in the fourth quarter of 2003.

And Dell has begun to make inroads in Europe, with a 5 percent fourth-quarter share, with its lower-end Axim. The line was
unveiled domestically about a year ago with fuller-featured models that included a 300 MHz processor and 32 MB of RAM and a price starting at $200.

“If anything, Palm has gone the other way with Tungsten,” Brown said of the enterprise-focused lines. Tungsten initially emerged as a high-end PDA-and-phone combo selling for around $500. However, recently Palm has released several low-end Tungstens, including models starting at $200 that compete with the likes of Dell’s Axim.

One thing Microsoft’s European momentum may be validating is the company’s revamped branding strategy. Until last year, Microsoft used the separate product names “Pocket PC” for its PDA offering and “Smartphone” for its cellular software. Now, both are preceded by the “Windows Mobile” moniker, as “Windows Mobile Software for Pocket PC” and “Windows Mobile-based Smartphone.”

Both are implementations drawn from the company’s Windows CE
code base. Microsoft has also spun CE-based software to power MP3 and
handheld video players.

“You can choose a PDA, a convergence device, or a Windows Smartphone,” Brown said of Microsoft’s lines. “There is quite a lot of interoperability among platforms. They’ve got a strong branding strategy.”

But as effective as that strategy has played out thus far in the PDA market, Brown said, its impact on phone volumes remains to be seen.

With the exception of a couple of successful handsets being offered by Anglo-French mobile operator Orange S.A., Windows remains a relatively low volume player in the mobile phone market in Europe.

The leader by far is the
Symbian operating system, which powers the handsets of market-leader Nokia.

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