Worldwide Handheld Shipments Dropped 12% Last Quarter

According to market research firm IDC, the worldwide market for handheld devices declined by about 12 percent in the first three months of 2004, when compared with the same quarter of the previous year. This breaks a brief trend, as PDA sales had increased during the third and fourth quarter of 2003.

While companies offering entry-level devices at lower price points have helped to grow the handheld user base in recent years, many would-be handheld purchasers bought their devices during the holiday shopping season in the fourth quarter of last year. As a result, despite growth in the European market, the seasonal slump hit vendors particularly hard during the first quarter of this year. This is typically the slowest quarter of the year for handheld sales.

IDC also said the market was also strongly impacted by a number of companies trimming down their product offerings and clearing their channels in preparation for spring product launches.

Results by Company

palmOne was hit particularly hard by the seasonality of the handheld market. It shipped almost 40 percent fewer handhelds last quarter than it had during the holiday season, and its market share declined from 39.4 percent to 36.1 percent. However, IDC says palmOne will announce two Zire handhelds this quarter and, given the fact that the Zire family has surpassed 3 million units in fewer than 18 months, palmOne's shipments are expected to increase in the near future.

HP posted the strongest year-over-year increase among the top 5 vendors with a rise of 24.8%. This increase, based on the strength of an array of devices hitting the entire spectrum of price points, enabled HP to maintain its market share position of 25.7 percent.

According to IDC, Sony is in the middle of a strategy shift to a reduced number of products and a focus on improved PIM and other core handheld applications. Its market share dropped last quarter to just 9.3 percent. Last quarter, Sony shipped about half the number of handhelds it had during the same quarter a year ago.

IDC credited a sales push in January as well as its direct sales model with giving Dell a 2.2 percent increase in shipments, when compared with the same quarter of 2003. This brought its market share up several points to 7 percent.

Despite a relatively lackluster first quarter with a year-over-year shipment decrease of 34.1% and a sequential decrease of 48.4%, Toshiba reentered the top 5 vendor list this quarter. Toshiba, a constant member of the top 5 vendors since late 2002, was knocked out of the top 5 vendor list last quarter.

IDC's Recommendations

"Despite increasingly powerful handheld devices reaching market, the consumer uptake of entry-level devices available from nearly every vendor calls into question the upgrade path and value posed by the high-end devices. If entry-level devices prove to be the most successful products adopted by consumers, the long-term impact could be acceleration away from hardware differentiation and a further loss of value in the handheld industry," said David Linsalata, analyst in IDC's Mobile Devices program. "Handheld device vendors must continue to search for consumer and enterprise solutions for their products, such as GPS device bundles, that utilize the range of capabilities contained in a handheld device."

Related Links

• Handheld Shipments See Strong Increases in Europe
• Worldwide Handheld Market Larger for Second Straight Quarter