Study Says: Smartphones Will Outsell Handhelds this Year

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The European analyst firm Canalys has released a study that predicts shipments of smartphones will exceed those of handhelds in the Europe, Middle East, and Africa (EMEA) region for the first time in 2003. It says about 3.3 million smartphones will be sold in the region this year, as opposed to 2.8 million handhelds.

Smartphones are devices that whose main function is to be a mobile phone, but also offer Wireless Data services and other features like PIM apps. This category includes devices such as the Orange SPV and Sony Ericsson P800.

Canalys lumped handhelds and data-centric handhelds together in this study, so this category includes devices like the Palm Tungsten T, the HP iPAQ series, the RIM Blackberry, and the O2 xda.

Canalys recommends that companies not make data-centric handhelds like the Tungsten W because these haven’t sold well and don’t have much chance of improving. Instead, they should embrace Bluetooth and its ability to connect a handheld with a mobile phone.

The analysts point out that today’s wireless handhelds make poor phones and are mostly bulky, expensive and feature-poor compared to the leading non-wireless handheld models. “Most people will want a separate mobile phone anyway, so they are better off going for one of the smaller, lighter handhelds to use with it via Bluetooth,” Chris Jones, Canalys director and senior analyst said. “Unless you have a very specific application that needs the unique characteristics of a wireless handheld it is hard to see why you would choose it over any of the other form-factor combinations.”

Smartphones are also improving to become viable handheld replacements. “In 2002 the Nokia 7650 feature phone was the device that took the market by storm, but it was bought as a Camera Phone rather than as some kind of handheld replacement. While it can do many of the things traditionally associated with a handheld, that isn’t where it excels. But if you look at devices like the Sony Ericsson P800 you can see that improvements are being made and gradually a lot of people will realize that the benefits of having just one device outweigh the usability compromises they may have to make. There will be users that prefer the larger screen and other characteristics of a handheld, and that’s why we expect handheld shipments to continue growing for the next few years. As more phones come with Bluetooth integrated, and GPRS pricing becomes less prohibitive, the handheld vendors can turn this environment to their advantage.”

What About the U.S.?

This study covers only the EMEA region, not the U.S., so the results don’t necessarily apply on this side of the Atlantic. Some of the best smartphones, like the Sony Ericsson P800, aren’t offered by the big service providers, though they can be purchased directly. Still, most people buy their phone from their provider so sales of these are likely to be small until the carriers offer them.

Also, many of the smartphones designed for Europe use GSM/GPRS, while CDMA is the leading wireless standard in the U.S.

So far, the Palm OS leads in smartphone sales in the U.S. Palm Powered smartphones had 89% share during the third quarter of 2002, the most recent data available.

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