Commentary: The business side of handhelds

Corporate buyers might be less thrifty than individual consumers, but they are still slow--especially in the current cost-conscious environment--to spend significantly on products that do not make a tangible contribution to the bottom line.

IT and business executives are rightly skeptical about the value of buying handheld computing devices that are being used as nifty gadgets--for example, accessing an e-mail account via a wireless local area network from a conference room. For many people, the limitations of a handheld's size--such as the small display--make it a questionable substitute for a desktop or laptop computer that is already sitting on their desks or carried in their briefcases.

At $600 per device--which approaches the cost of a low-end PC--plus additional costs for supporting a wireless LAN and providing help desk resources, handheld computers must be more than just functional and interesting. These devices need to either reduce costs or add to the average revenue per employee--and these benefits must be tangible, not just vague statements about "personal productivity"--for the business to be willing to invest in them.

Handheld computers, much like other peripheral computing devices, have demonstrated their value for repetitive data entry and data access tasks for mobile customers in manufacturing, health care, travel, retail and distribution, field sales and service, among other areas. Compared to the Palm, the expanded memory capabilities of the Pocket PC are well suited to these functions, and this is generating the current momentum for Pocket PC devices, such as Compaq Computer's iPaq, in the corporate market. Currently, these well-defined tasks are often handled by periodically uploading data from the handheld device to the network via a docking station, rather than wireless connectivity.

If companies have already invested in wireless LANs--and they have a valid business reason for using and managing that network--then handhelds that can integrate to that network are interesting. Companies need to match their requirements against the features and characteristics of various mobile computing devices to determine which make the most sense for their users.

Incremental improvements
Although the Pocket PC 2002 release provides new rich media capabilities and other interesting features--and the Pocket PC has gained ground as a rival to Palm--we view these as incremental improvements rather than innovations that will shift the handheld market into a higher gear. We do not expect the growth of the handheld market to accelerate until an expansive mobile display peripheral can be provided at a low price. That would be a breakthrough with the potential to double or triple the size of the market.

	See news story: Compaq readies release of new iPaq

Although some individual corporate customers find Pocket PC or Palm devices to be useful accessories when they are away from the office or as a note-taking device in meetings and so on, IT organizations must balance the support needs and wishes of these people against the overall investment priorities of the organization. However, even if handhelds are purchased by individuals, policies and standards should be established governing how these devices can interact with individual PCs and the corporate network, and what level of support will be provided.

It is not feasible for IT groups to simply bury their heads in sand and say that they are not going to support these devices, especially because many of the individuals buying them are high-level members of the organization. There needs to be a support plan in place for these devices, regardless of whether the corporation is buying them. And the IT organization must make the support costs clear to business adopters so they can decide whether the business value warrants the investment.

From a processor standpoint, the fact that the new devices in the Pocket PC arena will support only the ARM 4 chip provides a major boost in the handheld marketplace for Intel. All these makers of Pocket PC 2002 devices are building their products around Intel StrongARM chips. So we are seeing a very significant uptick in Intel's market share in the handheld space, where it previously had only a limited presence.

We believe companies should restrict purchases of such computing devices to circumstances where these devices deliver a clear return on investment. When responding to support requests from business units, IT groups should educate business executives on the true costs of supporting handheld devices, such as purchase prices, wireless modems, networking equipment, support and the like.

To accommodate and manage individual people purchasing their own handheld devices, the IT organization should provide guidelines, policies and standards that enhance these devices' usefulness in interacting with the corporate network or data while minimizing support costs and potential security risks.

When buying handheld devices or other "pervasive computing" devices, companies should aggressively seek discounts from manufacturers eager to build the size of this market.

Meta Group analysts David Cearley, Dale Kutnick, Val Sribar, William Zachmann, and Jack Gold contributed to this article.

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