Recently, IDC made headlines by reporting that shipments of handhelds had declined over 20% in the first quarter of this year. Today, rival market research firm Gartner released a report that that says this decline was only 11%. It isn’t unusual for the two firm’s results to be different but rarely by this large a margin.
An 11% decline is hardly good news but it still softens the blow that IDC dealt. The weak economy is blamed on reducing demand for handhelds among both consumers and companies.
The two agree about rankings for the quarter, though the percentages are off by a point or two. Both say that Palm was in first place with about 34% of the worldwide market. According to Gartner, Hewlett-Packard is in second place with 16% of the market, followed by Sony, with market share of 13%. Gartner says that newcomer Dell’s had a 4.9% market share, followed by Toshiba with 3.4%.
“Roughly half of Palm’s shipments in the first quarter of 2003 were from the $99 Zire. While Palm makes good margins on this unit, it needs better products at the upper end of the market if it is to maintain its strong position in the enterprise market,” said Todd Kort, principal analyst for Gartner’s worldwide computing platforms group. Between the time Mr. Kort wrote this and now, what he asked for may have come to pass. In a separate statement also released today, Gartner called the new Palm Zire 71 “a breakthrough product” and said it would “maintain Palm’s competitiveness in the low-price segment”. The same release said “the Tungsten C should do well in a variety of vertical applications and markets where the Palm OS is the standard.”
Although Palm shipped more that twice the units of its nearest competitor, its market share continued to decline. Toshiba and Sony showed the strongest growth among the top-tier vendors with growth rates of 276% and 60%, respectively.
One area being closely watched is whether Dell is cutting into sales of Hewlett Packard’s handhelds. “HP was forced to take a more aggressive pricing posture because of Dell’s entry into the market, but otherwise Dell has not yet seriously eroded HP iPAQ sales,” said Mr. Kort HP’s shipments did decline 2.5%, though.
In the competition between operating systems, Palm OS shipments represented 49% of the worldwide market, despite a shipment decline of nearly 400,000 units from one year earlier. The Windows CE market share totaled 36% in the quarter, as shipments increased by over 330,000 from one year ago. On an end-user revenue basis, Windows CE accounted for 52% of the market in the first quarter of 2003, while Palm OS licensees had 37% of the market, marking the first time Windows CE handheld revenue has surpassed Palm OS.
Palm remained in the lead in the U.S. handheld market with 38% of the market. However Palm was the only top-tier vendor to see its number of handheld shipments decline. In the same quarter of 2002, Palm’s share was 48.8%.
Sony moved up one spot to the No. 2 position with a 16.6% market share and a growth rate of almost 60%. HP fell to third with 13.5% but its shipments actually grew 6.1%.
Dell was in fourth place with 9.1% of the U.S. market. “Dell continued to perform well, as first quarter 2003 shipments of the Axim nearly tripled those from the fourth quarter of 2002. Momentum remained strong as Dell applied various promotions to maintain high levels of demand for its aggressively priced PDAs,” said Mr. Kort.
Research in Motion beat out Toshiba for fifth place with 4.7% of the market.
These numbers are all based on Gartner’s research. IDC didn’t release figures on U.S. sales.