There's been a 16.7 percent year-over-year shipment volume decrease from 2004 to 2005; converging capabilities and no new killer app may be the culprits.
Posted Feb 2, 2006
The holiday season is over, and it appears that the explosive growth period for wireless handheld devices is as well. Retailers worldwide celebrated 2005's highest wireless device shipment volume last quarter (up 37.6 percent from Q3 to 2.2 million units), but the industry showed a year-over-year decrease from 9.1 million units in 2004 to 7.5 million in 2005, a 16.7 percent decrease. These figures from IDC's "Worldwide Handheld Qview" indicate increasing pressure on the market from converged mobile devices that combine PIM functionality with mobile telephony.
According to the IDC report, Palm retains a stranglehold on the worldwide handheld device market, increasing its share in Q4 2005 to 45.6 percent, up from 43 percent the previous year. Second- and third-place vendors HP and Dell fell to 20.8 percent and 8 percent, respectively. All three report declining volume since 2004. Acer, occupying the fourth slot, more than doubled its shipment volume despite two consecutive quarters of declining volume, improving its market share from 2.2 percent to 5.7 percent.
"Vendors with a global footprint still lead the worldwide market, but more and more, vendors with a multi- or even a single region focus have earned top five worldwide status with their focused shipment distribution," says Ramon Llamas, research analyst at IDC's Mobile Markets group. "The departure of other worldwide vendors has opened the door for smaller vendors to improve their position within the market. During the course of the year, several smaller vendors remained within striking distance of beating each other for the number four or five position, and even posed a challenge to some of the worldwide vendors." As an example, Llamas recalls the Sony Clie, a well-received and highly functional PIM that debuted in the early 2000s. "The Clie was a great device, but Sony isn't even in the handheld space anymore. That means something when a global vendor like Sony with a good product backs out of the market."
Part of the issue facing the market is strong competition from converged mobile devices like Smartphones and BlackBerry devices, which combine the traditional functions of a handheld with mobile telephony and other features. "RIM, as a phone with email push capabilities on top of scheduling and other functions, is a very attractive value proposition compared to handhelds that lack some capabilities," Llamas says. "This is a mature market; beyond PIM, we haven't seen any new function for handhelds bring a really broad return-no new killer app."
Despite the loss of ground to converged devices, Llamas notes that the leaders are still committed to the handheld market, releasing new models aimed at different blocs of users, with more wireless capabilities or different price points. "We don't see them [handheld devices] going away. There are still devices for first-time users, as well as more complex ones for the experienced. With the addition of GPS solutions, multimedia capability, and WiFi connectivity, handhelds offer additional value beyond just PIM for the user."
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