Pocket PC Sales Equaled Palm OS Sales During the First Quarter

The battle for the handheld operating system market has heated up as PalmSource and Microsoft were in a virtual tie in shipments in the first quarter of 2004, according to preliminary results from market researcher Gartner, Inc.

Palm OS shipments declined by 20.7 percent in the first three months of this year, compared with the same period last year. This caused the Palm OS market share to slip to 40.7 percent, while Pocket PC's market share increased to 40.2 percent.

Microsoft licensees have been steadily chipping away at the Palm OS lead since 2000, when Microsoft accounted for just 11 percent of the PDA market. Nevertheless, palmOne is still the leading handheld company by a good margin.

"The decline in Palm OS market share in the first quarter of 2004 is not unexpected because many Palm OS users have delayed PDA purchases until they can evaluate PalmSource's upcoming operating system Cobalt," said Todd Kort, principal analyst in Gartner's Computing Platforms Worldwide group. "Palm OS has also been impacted by Microsoft's bundling of Outlook with every Pocket PC, and the preferred status that Microsoft Windows enjoys with enterprise application developers."

The big surprise was how well Research in Motion did. It experienced the strongest growth among PDA vendors as its shipments increased 352 percent. Its market share jumped to 14.8 percent in the first quarter of 2004, up from 3.1 percent in the first quarter of 2003.

"In the last nine months there has been tremendous growth in the use of RIM BlackBerry devices. Given the number of e-mail messages sent or received each day by mobile professionals, it makes sense for many of them to have a pocket wireless device that can be used to keep up with e-mail," Kort said. "RIM has begun licensing its technology to Nokia, Siemens, and Motorola for use in mobile phones, as well as to several PDA vendors. This will undoubtedly provide a significant boost to sales of a wide variety of wireless handheld devices beginning in the second half of 2004."

Results by Company

palmOne remains on top of the handheld market with a 30.5 percent share. However, it shipped about 10 percent fewer handhelds during the January-to-March quarter than it did during the same period of 2003.

As always, HP is in second place with 21.2 percent of the worldwide market. It had an annual increase of 27.4 percent.

Research in Motion was in third place with 14.8 percent on the market, the highest share this company has ever enjoyed. As mentioned earlier, this company's sales more than tripled, when compared with the same quarter of last year.

Sony and Dell rounded out the top five, with 8.4 percent and 6.0 percent, respectively. Sony's shipments had an annual decline of 38.8 percent, while Dell's increased by 12.0 percent.

Handhelds from other companies accounted for 19.0 percent of the world handheld market.

Results by Region

According to Gartner, worldwide handheld shipments declined 4.6 percent in the first quarter of 2004. This is in strong contrast to the results reported earlier this week by IDC, a rival market research firm, which announced that handheld shipments declined by 12 percent.

On a regional basis, Western Europe exhibited the strongest growth rate, as PDA shipments increased 24 percent in the first quarter. The U.S. handheld market dropped 13 percent. The Asia/Pacific and Japan regions saw shipments decrease 19 percent and 21 percent, respectively. Latin America handheld shipments were up 9 percent from the first quarter of 2003.

Related Links

• U.S. Smartphone Buyers Prefer Palm OS
• Worldwide Handheld Shipments Dropped 12% Last Quarter
• Handheld Shipments See Strong Increases in Europe