Worldwide Handheld Shipments Down 10%

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The worldwide market for handhelds declined yet again in the second quarter of this year. According to market-research firm IDC, worldwide handheld device shipments fell by 10.7%. Palm Solutions Group maintained its top position in the market while Hewlett-Packard continued to solidify its standing as the number 2 handheld vendor.

“This quarter illustrates the handheld device market’s struggle to grow beyond its roots. Personal information management is a killer application for 30 million individuals worldwide, but handheld devices lack an application that will further expand their appeal and differentiate them from technologies targeting similar market segments,” said Ross Sealfon, research analyst in IDC’s Smart Handheld Devices program. “Combined with worldwide economic uncertainty and an increasingly crowded market, handheld device vendors will have a difficult time building and maintaining market share.”

After a surge in shipments around the holidays, the handheld device market declined in each of the past two quarters. However, IDC points out that the decline during last quarter was not as steep as the decline experienced in the same quarter in 2002. This, coupled with an improving world economy, could signal that the market is due for a turnaround in the second half of the year.

While worldwide shipments are down, some regions are showing growth. Market researcher Canalys reported today that shipments of handhelds were up over 50% in the EMEA region during the most recent quarter.

Results by Company

Buoyed by the sales of its Zire 71 and Tungsten C devices, Palm maintained its leadership status and expanded its worldwide market share to just under 40%, up from 35%. According to the NPD Group, the Zire 71 has been the best-selling handheld in retail stores since it was introduced in April. Palm shipped 903 thousand units during the quarter, more than double the number of its next nearest competitor.

Hewlett-Packard and Sony had been battling for second place for some time. Last quarter HP took a commanding lead over the Japanese electronics giant. It had 16.8% of the market, based heavily on the strength of the $299 iPAQ h1910. With the launch of several new devices in June the company has the potential to increase its market share even more.

Sony’s market share declined from 16.5% in the first quarter of this year to 11.3% last quarter due to slower than expected sales of new models unveiled in March. Like HP, however, Sony launched new devices in June and July which the company hopes will re-energize sales.

Dell’s worldwide shipments declined slightly last quarter to 6.7% of the market, which IDC credited to an aging Axim product line and increased competition. The company’s progress in Europe and a late quarter push in Asia, however, helped the company maintain its number 4 position.

Over 2.26 million handhelds were shipped worldwide last quarter, compared with 2.45 million in the first quarter of the year.

These figures include handhelds and data-centric wireless handhelds but not smartphones. They are for handhelds shipped anywhere in the world, whether for sale in retail stores or directly to the consumer or business.

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