Worldwide shipments will slow from an 88 percent increase in 2000 to a more modest, but still healthy, 43 percent in 2001, IDC analysts said Wednesday. Growth is expected to be nearly as good through 2005, with the market growing an average of 39 percent per year.
About 13.6 million handhelds shipped last year. By 2005, IDC said, shipments are expected to reach 70.9 million annually.
The biggest opportunities are the Asia-Pacific markets, including China, Japan and Korea, and the U.S. corporate market.
"Large companies are still buying handhelds, but the future is the Asia-Pacific region," IDC analyst Alex Slawsby said.
Shipments in the Asia-Pacific region will grow at an annual rate of 60 percent from 2000 to 2005, IDC predicts.
Slawsby added that regional manufacturers in Asia, such as Hi-Tech Wealth and Minren, will have the best opportunity to expand their share of the handheld market and that devices with the Palm or Microsoft Pocket PC operating systems have about equal chances of succeeding there.
Earlier this month, for example, Palm signed a deal with Taiwanese electronics maker Acer to release a handheld using the Palm OS by the fourth quarter.
The U.S. market accounted for 49 percent of worldwide shipments in 2000, but IDC forecasts that this figure will shrink to 38 percent by 2005.
Although only 4 percent to 6 percent of Americans own a handheld, and although the market remains far from saturated, Slawsby said, the current economic slowdown is hurting U.S. sales. However, the corporate market will help make up for any drop in consumer spending.
This bodes well for manufacturers using Pocket PC, such as Compaq Computer and Hewlett-Packard. In May, Microsoft announced that the millionth device with Pocket PC had shipped, 10 months after first hitting store shelves. Analysts cited corporate sales, which are generally large volume, as the main reason for reaching that milestone in a relatively short period of time.
Palm executives recognize the corporate market as the next area of growth and have been trying to make inroads there. However, the company recently had to call off an acquisition that would have given it a boost in the corporate market.