Will The Handheld Market Soon Be A Two-Horse Race?

According to marketing guru Al Ries, in the long run, every market becomes a two-horse race. Coke and Pepsi. Hertz and Avis. Gerber and Beechnut. Will the same soon be true of the handheld market? Well, if you believe the rumors circulating Wall Street this week, the answer may be yes.

The handheld device market has certainly undergone numerous changes during the past few years. Several players, including Casio and Philips, have exited the consumer market, and it appears others, like Sony and Toshiba, are either scaling back or planning to leave as well. Still some companies, namely HP and palmOne, have grown stronger by acquiring their rivals and broadening their product lines.

This week we've heard whispers that Toshiba is pulling out of the U.S. handheld market due to declining sales. And then word slipped out that Dell may be eyeing palmOne, an acquisition that would put it on a collision course with arch-rival HP in yet another market. In fact, it would make Dell the leading handheld maker and HP a close second. Meanwhile, Sony, which looked like the rising star just a year ago, has slipped dramatically and may be reevaluating its role in the handheld market.

If all of these rumors are true, it would consolidate the market down to two major players, Dell and HP, and uphold Mr. Ries' eighth immutable law of marketing, the Law of Duality. Mr. Ries claims that all markets eventually get down to two players fighting for most of the market, with a handful of smaller companies grabbing what's left over.

There are two interesting side-points in a potential Dell acquisition of palmOne. One is that Dell would then have handhelds running both of the leading operating systems, Windows Mobile and Palm OS. (However, we've also heard word that HP has been negotiating with PalmSource for a Palm OS license, which would make it a dual-OS handheld maker as well.) Secondly, Dell would get the Treo smartphone and quickly leap ahead of HP and its upcoming iPAQ h6300 convergent handheld.

Related Links

• palmOne Shares Soar on Dell Acquisition Rumor