"Weak macroeconomics still persist in the handheld device market," Weili Su, senior analyst of IDC's Smart Handheld Devices research program, said in a statement.
However, Su said improvements in the economy and newcould help launch a recovery later this year.
"While we don't expect a rapid turnaround, the seeds of recovery are being sown," Su said. "Depending on regional economic environments, worldwide handheld device shipment growth may pick up...toward the end of the year as vendors debut new wirelessly enabled product offerings."
The industry isto rebound after a tough 2001 in which the market leader, Palm, was beset by a glut of products, leading to a brutal price war that spread throughout the industry.
Although things have stabilized, 3.25 million units shipped worldwide in the first quarter, off 12.1 percent from a year ago and 25.4 percent from the fourth quarter.
Handhelds around the world
Here are the top 10 sellers of handheld devices worldwide, the number of units they shipped, and their market share, according to preliminary first-quarter 2002 numbers.
Bucking the downward trend in the first quarter was Compaq Computer, which saw18 percent worldwide from a year ago, giving the company 10.1 percent of the market and foisting it into the No. 2 spot behind Palm, which had 39 percent of the global market.
Handspring fell from No. 2 to No. 3 worldwide with a sharp decline in units, resulting in its market share dropping more than five percentage points, to 9.9 percent.
"Handspring is slowly exiting the market, so that is not a surprise," said analyst Todd Kort with market researcher Gartner.
With its unit shipments up more than 250 percent from a year ago, Sony grabbed the No. 4 slot worldwide, with a 7.7 percent market share.
Sharp, which is just now bringing its Linux-based Zaurus to the United States, came in at No. 5 worldwide, boosted by its strong presence in Japan. Hewlett-Packard, which came in at No. 6 with a 4.4 percent share, saw its worldwide unit shipments off 43.9 percent from a year ago.
"This decline is not surprising given the anticipation of the HP-Compaq merger," IDC said in its release announcing the first-quarter results. "Many speculate that Compaq's iPaq line may emerge as the merged company's handheld device offering moving forward."
Gartner's Kort said he had expected HP to do better with its Jornada 560 series. The biggest unique feature of that line was its removable battery.
"That apparently didn't score them too may points," Kort said, adding that Compaq's model, with built-in Bluetooth, appeared to have done better.
Kort said the impending HP-Compaq merger could provide an opening for Toshiba or NEC, two of the latest companies to adopt Microsoft's Pocket PC operating system, to boost their share.
"There is a real opportunity for (a company) like Toshiba to become No. 2 in that side of the market, just like Sony is becoming No. 2 in the Palm OS side," Kort said.
Toshiba and NEC are not in the top 10 of worldwide shippers, but came out as No. 9 and No. 10, respectively, in the United States.
Casio garnered 4.4 percent of the global market, with shipments just trailing those of HP.
In the United States, Palm was also the leader, with a 47.5 percent market share. Handspring maintained the No. 2 spot, with a 14.6 percent share, although that was off more than two percentage points from the fourth quarter. Sony had 10.8 percent of the U.S. market, followed by Compaq with 8.6 percent and Research In Motion with 5 percent.