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Handhelds continue steady slide

Shipments of PDAs continue to decline, according to a recent report, which cites the slumping economy and slow sales to big businesses as the main culprits for the slowdown.

Once the toast of the gadget market, personal digital assistants have been losing some of their fizz and in 2002 continued a steady slide, according to a report released Monday from Dataquest, a unit of research firm Gartner.

Dataquest said that worldwide shipments of such handhelds fell by 9.1 percent in 2002, to 12.1 million units, compared with 2001.

The chief cause of this decline was the slumping economy, which slowed sales of the devices into big businesses, according to Dataquest analyst Todd Kort.

"The enterprise market is still another year away from embracing PDAs," Kort said in a statement.

Market leader Palm saw shipments decline 12.2 percent in 2002, to about 4.4 million units from about 5.1 million units in 2001, according to Dataquest. Hewlett-Packard, which holds the No. 2 spot in the market and is the market share leader for devices using Microsoft's operating system, saw worldwide shipments drop by 27.2 percent, to 1.6 million units from 2.2 million units.

Kort said that he was "disappointed" by HP and that the company was slow to take advantage of the benefits of Compaq Computer's handheld efforts following the merger of the two companies. "I didn't expect 1 plus 1 to equal 2 exactly, but I expected more than 1 plus 1 to equal 1.2," Kort said.

Sony, Toshiba and China's Hi-Tech Wealth were the only handheld makers in the top 10 whose market share did not fall.

Toshiba jumped to the No. 5 spot for worldwide market share, and Sony was entrenched at No. 3, according to Dataquest. Hi-Tech Wealth sat in the No. 9 spot. Handspring came in at No. 4, but its market share fell the most among the top 10, by about 49 percent. Handspring is moving its product line away from organizers and toward communicators. Dataquest's numbers did not include smart phones such as Handspring's Treo communicators.

Sony began selling a new device, the Clie SJ33, on its Japan and Hong Kong Web sites Monday. The newly designed Clie SJ33 uses the Palm 4.1 OS and comes with a 66MHz Motorola Dragonball Super VZ processor and 16MB of RAM, according to Sony's Web site. The device also includes an MP3 player and a screen that supports 65,536 colors and a resolution of 320-by-320 pixels. The Clie SJ33 has an internal lithium polymer rechargeable battery and will cost about $318. The consumer-electronics giant has not announced the Clie SJ33 in the United States, but the company has a history of launching devices in other countries before bringing them to the United States.

The Palm operating system still dominates the handheld market, with 55.2 percent, or 6.7 million units shipped, using the Palm OS. About 25.7 percent of handhelds shipped, or 3.1 million units, used Microsoft's Windows CE operating system.

Despite the slump, handheld makers aren't sitting back and waiting for businesses to start buying. In the fourth quarter, manufacturers looked to expand their target audience by releasing lower-priced devices. Palm introduced the $99 Zire in October and Pocket PC-based device makers such as Dell Computer, HP and ViewSonic also came out with similar but more expensive devices in the fourth quarter.

PalmSource, the OS subsidiary of Palm, announced earlier this month that it would drop its signature Graffiti handwriting recognition software for the presumably easier-to-use Jot software from Communication Intelligence. The move is meant to make it easier for less-tech-savvy consumers to use a Palm OS-based device.

Kort said that the Zire made up about a third of Palm's shipments in the fourth quarter and helped the company maintain its unit market share, but brought down Palm's average selling price for devices.

Dataquest said that Dell--whose entry into the market was highly anticipated--shipped only 51,000 units, but Kort added that Dell could triple that in the current quarter.