July 23, 2003, 9:39 AM — Worldwide shipments of handheld devices dropped significantly in the second quarter of the year, as continued tight budgets and a lack of compelling new applications stifled demand, a report released by IDC this week revealed.
Handheld device shipments dropped 10.7 percent in the second quarter compared to the same period a year earlier, to 2.27 million units. That is a 10.2 percent sequential drop over the prior quarter, indicating dried-up demand among businesses who have more pressing IT spending priorities, IDC said.
A spike in handheld shipments over the holidays also satiated consumers, who have not found compelling enough reasons to replace their older models, IDC said.
The researcher noted that managing personal information continues to be the leading use of handheld devices and that the industry has yet to come up with a new killer application to drive further growth.
Palm Inc. continued to lead the market with 39.9 percent market share in the second quarter and 903,096 units shipped. The company's Zire 71 models and popular Tungsten C devices buoyed sales, IDC said. Palm's announcement in June that it is buying Handspring Inc. puts it in a position to reap even more sales in the converged handheld market, IDC said.
Hewlett-Packard Co. (HP) trailed Palm's lead with 16.8 percent of the market, strengthened by its US$299 H1910 model, IDC said. What's more, HP's introduction of five new devices in June sets it up to gain more market share in the months to come, the researcher predicted.
Sony came in at number three, with 11.3 percent of the market, followed by Dell Inc. with 6.7 percent. Dell lost ground compared to the previous quarter, in part due to its aging Axim device, IDC noted.
But while second-quarter shipments represented a bruising drop over the previous year, it was not as severe as the year-over-year decline recorded this time last year, for the second quarter of 2002, IDC said.
This improvement, along with a more encouraging macroeconomic outlook, bodes well for the industry, which is set to recover in the second half of the year fuelled by vendor upgrades to their devices and applications, IDC said.
IDC is a division of International Data Group Inc., parent company of IDG News Service.