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No slowdown for PDA boom

The market for personal digital assistants enjoyed a year of high-octane growth in 2000, moving from the corporate world into the hands of consumers. And analysts say 2001 looks just as good.

Richard Shim Staff Writer, CNET News.com
Richard Shim
writes about gadgets big and small.
Richard Shim
3 min read
The market for personal digital assistants enjoyed a year of high-octane growth in 2000, moving from the corporate world into the hands of consumers. And analysts say 2001 looks just as good.

Palm IIIc "That you can find PDAs in Target and Wal-Mart is a clear indication that PDAs are a consumer play," Gartner analyst Abha Garg said.

Looking to 2001, analysts expect consumer demand to stay strong even though PDA manufacturers will be under pressure to remain nimble as they fend off new rivals. Palm, by far, remains the dominant player in the PDA market. At the same time, Microsoft's Pocket PC-based devices have become more competitive with the addition of slimmed-down, stylish cases.

Still, analysts and company executives assert there's more than enough demand to support all the players without triggering a shakeout.

"Our product lines will diverge as the market grows. Different strategies and markets will emerge," said Jeff Hawkins, Handspring co-founder and chief product officer. "So far, it's clear that we are expanding the market and not taking away users from one another."

Palm chief technology officer Bill Maggs agreed. "The market is growing fast enough that all licensees can benefit. Handspring started rapidly but Palm was still able to make our numbers," Maggs said.

New niches
Handspring managed to ship its one-millionth device after just one year in business. Yet Palm was still able to sell 4.4 million units in 2000, according to the company.

The PDA market is growing up, IDC analyst Kevin Burden said. "A market with only a few players isn't a real market," Burden said. "What's significant, though, is that new players are addressing new niches, which will help growth."

PDA unit shipments nearly doubled to 9.4 million in 2000, compared with 5.1 million the previous year, according to Gartner. And both Gartner and IDC expect annual PDA shipments to be in the range of 30 million worldwide by 2004.

"A lot of the current players are addressing different markets," Burden said. "If one company leaves out a certain feature for the sake of elegance, another picks it up."

Sony is targeting the consumer lifestyle and will add more entertainment features to its device. The consumer giant has a significant pool of content from within the company to draw from but also plans to use content from third parties.

Handspring will continue to focus on expandability. Recently the company released a list of add-ons it was shipping that include a phone, global positioning system, MP3 player and camera. The list included 25 modules that are shipping, with another 15 on the way.

Compaq iPaq H3600 Pocket PC Next battleground
Palm made it clear at its recent developers conference, PalmSource, that its next frontier is the corporate market. But the company is also focusing on wireless and will market its personalized portal, MyPalm.com.

Microsoft and its Pocket PC hardware vendors will continue to focus on corporate customers.

Two currently nascent categories that will help to expand the PDA market are pagers and so-called smart phones, according to ARS analyst Matt Sargent.

Research In Motion, with its popular BlackBerry pager, has been active signing up licensees. Already on board are Compaq Computer, America Online and Motient.

And the recently announced Samsung smart phone--based on the Palm operating system--will be available in the United States in the second quarter of 2001. Kyocera also announced its Smartphone based on the Palm OS.

About the only thing that might slow growth is the shortage of components, such as flash memory and LCDs, that plagued the entire industry in 2000.