Palm V. Microsoft? Palm wins in 3rd qtr. Sales

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Results for 3rd quarter handheld shipments are in!

Palm Inc. (Nasdaq:PALM – news) remained dominant in the market for the wallet-sized digital organizers, although its market share fell to 30 percent from 32 percent worldwide and to 38 percent from 40 percent in the United States. Industry No. 2, Handspring Inc. (Nasdaq:HAND – news), which began shipping new models during the quarter, gained market share. It claims a 14 percent stake globally, up from about 11 percent, while its U.S. share grew to 22 percent from 17 percent. PALM VS. MICROSOFT Palm and Microsoft, makers of competing software that powers PDAs, are battling for a market expected to grow significantly in coming years as devices evolve into smart communications tools capable of making phone calls, sending e-mail and retrieving data from office networks. While the tough economy has hurt all PDA makers, Palm’s momentum has been further stalled by oversupply and a price war with Handspring. Microsoft, far bigger than Palm and known for aggressive competitive tactics, has seen steady sales growth for devices incorporating its technology as it focuses on the corporate market. In the third quarter, Palm operating system devices accounted for 52 percent of the global PDA market. Gartner said potential buyers of handhelds using Microsoft’s systems may have held back in the quarter, waiting for the newest version of the software to be unveiled. “An October ship date for Microsoft’s Pocket PC 2002 was known a few months in advance to those who follow the PDA market,” Gartner analyst Todd Kort said in a statement. ”Customer knowledge of this milestone event appears to have significantly dampened demand for and shipments of Pocket PC products during the third quarter of 2001.” Compaq Computer Corp. (NYSE:CPQ – news), whose iPAQ device is powered by Pocket PC, appeared to be most affected by users who waited to purchase a new PDA. Gartner said shipments of iPAQs had been steadily ramping up from late last year through about the middle of 2001, as Compaq had trouble meeting demand. “By June, Compaq had matched supply,” the Dataquest report said, “and in the third quarter demand dried up in anticipation of a new generation of Pocket PCs.” Compaq’s worldwide PDA market share fell to 7.3 percent in the third quarter from 16 percent in the second quarter.



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