Shoppers Put PDA Plans on Hold

Worldwide shipments of handheld computers are expected to continue their slow growth in 2002 as the IT industry rebounds from financial woes and corporate users wait for more advanced wireless capabilities, a research firm says Wednesday.

After a 114 percent gain in PDA shipments between 1999 and 2000, the uptake for such devices in 2001 and 2002 has been whittled down to year-over-year growth of about 18 percent, according to research from Dataquest, a unit of Stamford, Connecticut-based Gartner.

"That's a pretty big slowdown," says Todd Kort, principal analyst with Dataquest's platform computing group, who headed the research.

As many as 15.5 million PDAs will be shipped in 2002, the research company predicts. That would be an 18 percent increase from 2001, when 13 million units were shipped.

Upgraded Options

Only in 2003 are the numbers likely to start picking up again, Kort says. That recovery will hinge on several factors, including a resurgence in corporate IT spending, new wireless capabilities built into PDAs, and a recovery among some of the hardware makers producing new devices.

"Certainly wireless is something that everyone is getting excited about," Kort says. "But corporate customers are being pretty cautious about rolling out new mobile projects."

Before investing in mobile devices, many corporate customers are waiting for wireless carriers to upgrade their systems to support packet-switched networks, which are better suited to wireless data services, Kort says. Carriers such as Nextel Communications and Sprint PCS Group have said they won't roll out these advanced wireless networks until the second half of the year.

The lack of corporate spending on PDAs is apparent in Dataquest research, as the company notes that roughly three-quarters of the PDAs sold worldwide were purchased by individuals and not corporations.

Hardware Makers

Also impacting the slow growth in worldwide PDA shipments in 2002 is the health of hardware makers building handheld devices. Both Palm and Handspring, the second-largest maker of handheld computers based on the Palm OS, have produced a smaller volume of devices compared to years past, Kort says.

"I think they're rebounding now, slightly. However, Palm is still not at the volume levels it was at a year ago," he says.

Roughly 57 percent of all PDAs shipped around the world last year were based on the Palm OS, an operating system developed by Palm subsidiary PalmSource and licensed to hardware makers including Sony and Handspring, according to Dataquest research.

"When Palm takes a dive, as it did, it pulls the whole market down," Kort says.

Microsoft's Moves

Also holding a sizable chunk of the market are devices built on a scaled-down version of Microsoft's Windows operating system called Windows CE. About 18.5 percent of the units shipped were based on Windows CE, up from 11.3 percent a year earlier, according to Dataquest.

Additionally, Dataquest expects software and hardware upgrades due later this year from manufacturers licensing the Palm OS and Windows CE will help drive sales of the devices next year. Version 5 of the Palm OS is expected to be released in June, with new devices based on that operating system expected to appear soon after.

Microsoft and Palm are also expected to add support for new microprocessors from Intel and Texas Instruments, which should lead the production of a wider variety of PDAs and could help boost sales, Kort says.