IDC: Handhelds Continue Decline

According to IDC’s Worldwide Handheld QView, device shipments decreased 12.1% year-over-year and fell 30.6% sequentially in 1Q05 to 1.9 million units. In contrast, the worldwide converged mobiledevice market achieved its third consecutive quarter of year-over-year growth exceeding 100%, rising 134.6% year-over-year to 8.4 million units despite a sequential drop of 3.3% in the firstquarter.

Following a trend started by Handspring nearly five years ago, a growing number of handheld device vendors continue to shift resources towards the flourishing converged mobile device market. Facing intense competition from converged mobile devices with basic personal information management (PIM) functionality, handheld device vendors are leveraging their core competencies in mobility to bring advanced converged mobile devices to market. While innovation in the handheld device market remains, whether in the form of palmOne’s recent creation of its “mobile managers” or Acer’s n35 with integrated GPS, vendors still face significant challenges in generating renewed growth in the handheld device market.

“The handheld device market is facing stiff competition in saturated markets, while the converged mobile device market offers opportunities for new growth to handheld device and mobile phone vendors alike,” said David Linsalata, research analyst in IDC’s Mobile Devices program. “Unless handheld device vendors can successfully extend the meaningful use of handheld devices beyond PIM, the opportunity for future growth will remain firmly in the converged mobile device segment of the market.”

Vendor Highlights

— palmOne – palmOne continued to lead the handheld device market, although the perennial market leader was not immune to the pressures of a shrinking market, declining 23.6% year over year. Strong growth existed in the converged mobile device space, however, as shipments to new carriers and channel partners spurred the company to an impressive 130.3% gain.

— HP – Also feeling the effects of the declining market, HP’s handheld device shipments dropped 14% year over year. The company continues to see strong growth in areas such as GPS solutions, however, and HP’s still relatively recent entrance into the converged mobile device market positions the company well for further growth.

— Dell – Building off strong demand for its high-end devices in both the Axim X50 and X30 product lines, Dell grew its handheld device shipments 37.4% year over year. Dell remains squarely focused on the handheld device market and on creating devices that integrate with the rest of the company’s product portfolio.

— Nokia – Leveraging its appeal to mass-market consumers, Nokia maintained its lead in the converged mobile device market. With over 204% year-over-year growth, the company looks to continue to drive strong shipments through innovative new products such as its Nseries multimedia smartphones.

— Research in Motion – After exhibiting an average of 445.7% year-over-year growth during the past three quarters, RIM preserved its number 2 position with a 80.9% year-over-year rise during the first quarter of 2005. RIM’s shipment growth resulted in part from a diversified 7100 product line and the addition of new carriers in Europe.

Top 5 Vendors, Worldwide Handheld Device Shipments and Market Share, 1Q 2005 (Preliminary) Rank   Vendor     1Q 2005    1Q 2005 Market  1Q 2004   1Q 2004 Market                   Shipments       Share      Shipments      Share----------------------------------------------------------------------  1     palmOne    619,253        32.6%       810,183       37.5%----------------------------------------------------------------------  2       HP       496,755        26.2%       577,615       26.8%----------------------------------------------------------------------  3      Dell      216,229        11.4%       157,399        7.3%----------------------------------------------------------------------  4      Acer      124,034         6.5%       20,354         0.9%----------------------------------------------------------------------  5     Medion     79,500          4.2%       14,000         0.6%----------------------------------------------------------------------         Other     361,098        19.0%       578,997       26.8%----------------------------------------------------------------------         Total    1,896,869       100.0%     2,158,548      100.0%----------------------------------------------------------------------Source: IDC, May 11, 2005Top 5 Vendors, Worldwide Converged Mobile Device Shipments andMarket Share, 1Q 2005 (Preliminary) Rank        Vendor        1Q 2005     1Q 2005   1Q 2004    1Q 2004                           Shipments    Market   Shipments   Market                                         Share                Share----------------------------------------------------------------------  1          Nokia        5,400,000     64.5%   1,771,508     49.6%----------------------------------------------------------------------  2    Research in Motion  769,818       9.2%    425,600      11.9%----------------------------------------------------------------------  3         Fujitsu        710,000       8.5%    350,000      9.8%----------------------------------------------------------------------  4         palmOne        386,705       4.6%    167,921      4.7%----------------------------------------------------------------------  5      Sony Ericsson     207,129       2.5%    203,652      5.7%----------------------------------------------------------------------             Other         899,094      10.7%    650,964      18.2%----------------------------------------------------------------------             Total        8,372,746     100.0%  3,569,645    100.0%----------------------------------------------------------------------Source: IDC, May 11, 2005

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