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PDA market continues dramatic decline

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PDA market continues dramatic decline

Framingham (MA) – Personal digital assistants (PDAs) without cellphone functionality are driven more and more into a niche market. The segment was hit with a steep double-digit decline in shipments once again: PDA manufacturers are shipping less than half the volume of devices than they did in 2001.

There appears to be little that can help the traditional PDA in its battle against networked handheld devices such as cellphones, smartphones and PDAs with cellphone functionality. IDC reports that 5.5 million handhelds shipped during 2006, which is still a sizable market, but considerably less than the segment’s performance from a few years ago.

The current number is down 28.5% from 2005 (7.5 million units), which was down almost 18% from 2004 (9.1 million units). The market peaked in 2001 with a volume of 13.1 million units, which was up 22% from 10.7 million units in 2000.

“The handheld devices market is under intense pressure from networked mobile devices,” says Ramon Llamas, an analyst at IDC. “Features found on handheld devices, including personal information management functionality, multimedia, and Bluetooth connectivity have also been included on smartphones and high-end phones. The proliferation of notebook computers with embedded wireless WiFi has also allowed users to remain connected while on the go, further reducing the demand for handheld devices. Finally, GPS devices have gained momentum in the marketplace, and also negatively impacted handheld devices,” Llamas said.

Llamas expects the downward trend for PDAs to continue in 2007.

On a vendor basis, Palm maintained its #1 spot with aging devices such as the Tungsten E2 and the Life Drive as well as the youngest models Z22 and TX, which, however, are already about 18 months old. Palm commands a 36.3% market share, but recorded a shipment decline of 28.3%. HP came in second with 22.1% market share and a shipment decline of 30.4%, followed by Dell 9.0% share and 33.4% shipment decline. Mio in position 4 and Sharp in 5 were the only top-5 vendors that were able to increase their shipment volume (29.2% and 275.7%, respectively) and currently hold market shares of 8.1% and 5.4%, respectively.

If cellular connectivity is brought into scenario, the PDA segment isn’t doing so bad. According to Gartner, all PDAs (with and without cellular features) reached shipments of 17.7 million in 2006, up 18% from 2005. Market leader is Research in Motion, which shipped about 3.5 million Blackberry devices through out the year. Palm was listed in second place with 2.0 million units and HP in third with 1.7 million.

“60% of all PDAs shipped in 2006 offered cellular connectivity, up from 47% in 2005,” said Todd Kort, analyst at Gartner. “48% of all PDAs shipped in 2006 were purchased by enterprises. This was about the same percentage as one year ago due to the strong sales to consumers and prosumers of devices, such as the Sidekick 3, Mio Technology GPS devices and the Motorola Q.”
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