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Connectivity Is Key to PDA Future
By Joaquim P. Menezes
The story of the PDA/handheld market in the past 12 months has been a chronicle of contradictions. Its performance was generally lacklustre - but spectacular in certain segments - it witnessed the sudden exit of one major player (Sony), while another (PalmOne) laid ambitious development plans. Amid the uncertainty, however, one message emerges clearly. The days of standalone PDAs, with limited contact and calendar-management capabilities are numbered.
“Buyers are clamouring for hybrid devices that combine voice and data capabilities,” says Eddie Chan, a research analyst with IDC Canada's mobile/personal computing and technology practice in Toronto.
To meet this need vendors must build wireless Internet capabilities into their devices or offer support for applications such as GPS tracking.
Chan says that all the demand right now is in the converged mobile space. An IDC Canada study shows converged device shipments in Canada increased a whopping 216 per cent year-on-year in Q1 of 2004. Interestingly, the same quarter saw a 9.5 per cent year-on-year decline in handheld unit sales. (IDC includes both pen-based and keypad-based devices in its definition of handhelds).
Smart Surge
Other studies indicate an upsurge in hybrid device sales. For instance, U.K.-based research group Canalys reports that global “smartphone” sales completely outstripped the PDA market, which is dominated by devices such as Palm handhelds, HP iPaqs and Sony Clies.
There's a definite message in all this, according to David Linsalata, an analyst with IDC's Mobile Devices division in Framingham, Mass. “Handheld device vendors must continue to search for enterprise and consumer solutions for their products, such as GPS device bundles that utilize the range of capabilities contained in a handheld device.”
Vendors are getting that message. PalmOne, for instance, has reorganized around its smart phone technology acquired from Handspring last October. The company will “shift more investment towards the higher-growth smartphone category,” while maintaining its leadership in handhelds.
It then sought to deliver immediately on those assurances, with the release of two hybrid devices: the Palm Treo 600 Smart Phone and two colour Zire PDAs. Treo 600 is undoubtedly the company's showpiece and its fastest selling product - with shipments increasing 37 per cent from PalmOne's second quarter to its third quarter, which ended in February.
Small and light enough to fit into a pocket, Treo 600 is a full-featured mobile phone, Palm OS organizer with a built-in QWERTY keyboard, a wireless communication device and a digital camera. It offers e-mail, messaging and Web browsing capabilities, as well as an integrated SD/multimedia card slot that lets users add memory and content.
According to Chan, Treo 600 - which retails for around Cdn$800 with a year's voice or data service subscription - represents PalmOne's first serious foray into the smartphone market. He says Treo 600 is leagues ahead of Tungsten W, Palm's data-centric PDA, which “didn't quite resonate with buyers.” (Tungsten W also combines phone functionality with wireless email, SMS messaging, business applications, and Palm's Personal Information Management software).
In response to buyer demand some vendors have bundled GPS features and support into PDAs. For instance, Garmin International Inc. headquartered in Kansas City, says its recently launched iQue 3600 is “the first PDA to include integrated GPS technology.” The device, along with Garmin's Auto Navigation Kit, retails for around Cdn$700.
While PDAs with integrated GPS features definitely offer value, Chan says prices will have to come down considerably for these devices to really take off. In Canada more product is being shipped in the $300 price band. “The higher end devices have faster processors and clock speeds but also need larger batteries, so they tend to get clunky…and buyers prefer something thin and easily manageable.”
IDC Canada predicts that the “converged devices” market in this country will grow 20 per cent over the next four years. As for the traditional PDA devices, speculation is rife as to which vendors will benefit from Sony's decision not to develop and sell Clie handhelds in North America.
Some industry insiders say Sony's exit simply continues the trend toward consolidation of marketshare in the traditional PDA business to two major players, HP in the Pocket PC arena and PalmOne in the Palm OS arena. os
Joaquim P. Menezes is a Toronto-based freelance writer. He can be reached at joaquimmenezes@rogers.com.
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