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HP gains on rivals in European PDA market

By Matthew Broersma, ZDNet.co.uk, 29 January, 2002 17:34

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Compaq, Pocket PC, iPAQ, Palm, Bluetooth, Symbian, HP, Windows CE, nokia communicator, Jornada

NEWS
Hewlett-Packard's Jornada handheld computer had its most successful quarter ever in Europe at the end of last year, due to a well-positioned launch of Pocket PC 2002 devices, according to new research released on Tuesday. The figures, from market research firm Canalys, show that Palm regained its position as the top-selling PDA maker, but the PalmOS platform did not fare so well overall: Canalys noted that Windows CE, the operating system from which Pocket PC is derived, was the only platform that has grown in market share from a year ago. The success of Windows CE was buoyed by sales of Compaq's iPaq PDAs, which came in second, while sales of Nokia's Symbian-based Communicator smartphone dropped off after a strong start. All PDA makers struggled last year, with Palm particularly hard-hit by a massive inventory build-up that forced the company to slash prices on unsold products. Palm and Microsoft's Pocket PC-based devices -- such as iPaq and Jornada -- are locked in a bruising struggle for survival, with many predicting that Palm's simpler devices will be marginalised by the increasing success of Pocket PC in large corporations. Palm's European sales recovered in the fourth quarter, shipping 302,060 devices as against Compaq's 121,270 units, and the Palm OS still holds 43.3 percent of the Western European market, according to Canalys. But the situation could change quickly this year with the introduction of new wireless technologies. Nokia briefly held the top spot last year after the introduction of its latest Communicator, a colour-screen smartphone running on the Symbian OS. In the fourth quarter its sales slipped into third place with 80,640 units, or 9.1 percent of the market. HP's PDA sales have long disappointed observers, but its sales jumped to 77,525, or 8.8 percent of the market, in Q4 of 2001. Last year at the same time HP shipped 41,445 devices. "Looking at the Pocket PC market, HP had a great quarter. It had a product ready to ship right at the launch of Pocket PC 2002, and there were a lot of early adopters who were keen to have it," said analyst Andy Buss. He also noted that since Pocket PC hardware has now been standardised, the offerings of HP and others are more on par with the iPaq. Despite Palm's recovery, the company's sales were still down 33 percent compared to the same quarter last year, while Compaq's shipments were up 147 percent and HP's rose 87 percent. Palm's growth was mainly achieved through "aggressive pricing", Buss said. This year the two factors that will probably have the most effect on the PDA market are Palm's introduction of higher-end hardware and the appearance of new wireless devices. Palm and the Pocket PC family are likely to stick with variations on their existing offerings for most of the year, but late in the year Palm will upgrade to a new operating system and hardware with capabilities like multitasking and higher-resolution displays. The shift will be Palm's main thrust into the corporate market, allowing its devices to run enterprise-class applications for the first time. But Canalysis notes that Palm will be entering for the first time into territory that Pocket PC has staked out from the beginning. "Their big push will be OS 5," Buss said. "That will be their version 1 (of the high-end platform), while Microsoft is on its version 3 now. But now Palm has separated its operating system division from its devices, and that should help them." Palm refreshed its integrated wireless line with the i705 earlier this week, a device which adds always-on email to standard Palm hardware. The i705's features are similar to the BlackBerry from Research In Motion, which has proven popular in the US corporate market, and BlackBerry and the i705 are currently the only PDAs that offer always-on connectivity. But both devices require users to also carry a mobile phone, and the phone must have a separate wireless connection. For Europe, analysts say a more successful solution might be handhelds with built-in Bluetooth, which allows the device to form an Internet connection via a mobile phone. Buss noted that Bluetooth is beginning to ship in mainstream mobile phones, like Ericsson's T68, and has the potential to ship hundreds of millions of units. For this year Canalys predicts Bluetooth shipments will be at least in the high tens of millions. Compaq is already shipping a high-end iPaq with built-in Bluetooth, and Palm may do so later this year. Palm's more immediate solution will be a Bluetooth card, which is already available in Japan; but since Palms have only one card expansion slot, users will have to remove the Bluetooth card to expand memory or add other features.
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