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Handheld market clenches tighter

In the second quarter, worldwide unit shipments decline overall and for market leader Palm. Hewlett-Packard's shipments are on the upswing, while Sony holds its ground.

The worldwide handheld market contracted for the second time this year during the second quarter of 2002.

Palm held the top spot in the market with 32.4 percent of shipments, according to IDC, but competitors Hewlett-Packard and Sony were able to encroach on its dominance.

Palm shipped 845,640 units during the quarter, a decline of 33 percent from its first-quarter shipments of 1.27 million units, IDC said in a report of preliminary numbers for the quarter on Thursday.

But it's too early to say Palm is in trouble, said Weili Su, an analyst with IDC.

"Quarter to quarter, everyone's market share fluctuates. You really have to wait until the end of the year to see if Palm is suffering, allowing the other competitors to move up," Su said.

While Palm's unit shipments declined, HP's ticked up to 485,200, while Sony held the line at 250,000. The increase helped HP gain 3.5 points of share over the first quarter to finish in second place with 18.6 percent of the market. That period was the first in which IDC counted both HP and Compaq handheld shipments together. The companies finalized their merger in May.

Worldwide Handheld Device Sales,
Second Quarter 2002

Vendor Units Market share Growth from Q1 2002
  Palm     845.64     32.4%     -33.3%  
  Hewlett-Packard     485.20     18.6%     2.6%  
  Sony     250.00     9.6%     0.0%  
  Handspring     170.59     6.5%     -47.0%  
  Hi-Tech Wealth     119.74     4.6%     -3.7%  
  Sharp     112.00     4.3%     -20.4%  
  Toshiba     100.16     3.8%     546.2%  
  RIM     87.77     3.4%     -9.0%  
  Minren     56.79     2.2%     -16.7%  
  Legend     47.69     1.8%     6.1%  
  Other     331.84     12.7%     3.6%  
  Total     2,607.42     100.0%     -16.5%  
Source: IDC
Sony moved up 1.6 points to a 9.6 percent share of the market. The company, which recently added a new lower-priced model, the $150 Clie PEG-SL10, to its lineup will keep the pressure on both Palm and HP.

Handspring saw steep declines during the period, after having turned its focus to its Treo line, which combines the features of cellular phones and organizers. The manufacturer shipped 170,590 units in the second quarter, almost half as many as it did during the first. Still, it held fourth place, grabbing 6.5 percent of worldwide unit shipments.

Hi-Tech Wealth rounded out the top five with 119,740 units or 4.6 percent of the market.

The entire worldwide market declined by 16.5 percent from the first quarter to 2.6 million units, IDC said. Looking ahead to the rest of the year, Su said, growth will be flat at best.

"The picture isn't pretty," she said. "Nobody is doing well."

The decline in unit shipments of handhelds, the sales of which are driven primarily by consumers, shows that people are sensing that the economy isn't really turning around quickly and are holding off on at least some purchases, she said.

It was a somewhat similar picture in the United States, where the market saw an 18.9 percent decline to 1.3 million units. On a positive note, unit shipments in the country were up nearly 8 percent year over year from the second quarter of 2001.

Palm, the No. 1 vendor, saw its unit shipments decline to 557,840 during the quarter, a 31.2 percent drop. Its smaller 42.1 percent share of the market allowed HP and Sony to grab more share.

Meanwhile, HP increased shipments by 7 percent to 228,120, giving it the No. 2 spot with 17.2 percent of the market. Sony's shipments declined 5.4 percent to 175,000 units, but it held on to third place. Thanks to Palm's decline, Sony's share grew to 13.2 percent of the market.

Handspring shipped 133,860 units, about half as many as in the first quarter. It had 10.1 percent of the market. Research in Motion shipped 80,320 units, which gave it 6.1 percent of the market.