Although Palm still sells far more handhelds than Compaq, sales of the iPaq have grown quickly since the device was introduced two years ago. Compaq says it has now sold 2 million of the silver-toned devices. Because of its higher price tag, it generates comparatively more revenue than the average Palm. Last quarter, for example, iPaq sales generated $160 million for Compaq, up 18 percent from a year earlier.
"We're doing this at a time when our two major competitors--Palm and Handspring--are down," said Peter Blackmore, Compaq's executive vice president for worldwide sales and services. However, Palm's sales in the most recent quarter were still $300 million, almost twice Compaq's level.
Compaq's decision to break out the iPaq's financial performance comes at a tenuous time for the company. HP has said that the unit that includes handhelds will be made up of products from both companies, but has has not specified whether it will keep both the iPaq and HP's Jornada.
"The iPaq is a clear market leader," Blackmore said. "You can draw your own conclusions."
From its introduction in April 2000, the iPaq has drawn a strong following among handheld enthusiasts, with the earliest modelbids above list price at online auctioneer eBay.
More recently, Compaq has been focused on getting large companies and government entities to use the handheld. According to the company, firefighters use the device to track wildfires, pilots use it to track flights and BMW sells it as an option with its Z3 in Germany, allowing executives to use it for navigation in the car and as an organizer once they leave.
Compaq also said it is working with Raytheon to develop Agama, a more rugged version of the iPaq for the military market.