The market for handheld computers is poised to explode, according to a report from market research firm Dataquest, which found that worldwide unit shipments of handheld devices will grow from 3.9 million units in 1998 to 21 million units in 2003.
This growth will largely result from increased application development, including wireless and wired Internet access, and lower prices for the devices themselves.
"The key here is bringing new users into the market," said Scott Miller, a Dataquest analyst, adding that these users will be lured by "the combination of lower price points as well as an expanding application set, including wireless and wired communications."
To achieve this popularity, future handhelds will need to include some Internet access to enable email or even more limited messaging, he said. "Few emails are truly urgent. The notion of a pager is something that you have to answer, but what you find after you use one of these things is that you don't have to [answer these emails] in most cases. "
In the next five years, these connected devices will need to drop to under $150 to appeal to a wider range of buyers, analysts say.
Miller projects worldwide handheld sales to account for $7.2 billion in revenue by 2003, up from $2.3 billion in 1999. Accordingly, the installed base of handheld users will grow to 32.5 million units by 2003, he said.
Not surprisingly, Microsoft and its bevy of manufacturing partners and Palm Computing will continue to dominate the market with their respective Windows CE-based and Palm OS-based products. Palm and Microsoft already enjoy 67 percent of the market, but devices with proprietary operating environments will see their market share further squeezed, to about 8 percent of the market in 2003.
"Palm has all the momentum," he said. "Microsoft and its Windows CE partners are doing a good job pushing the outer limits of what's possible," such as color displays and longer battery life, while Palm "sits back and picks the features consumers want. It's possible Windows CE has moved too quickly."
Miller points to Palm's newly released Palm VII wireless handheld device as a precursor to future devices with mass market appeal.
"In evolutionary terms, it's certainly a new branch off the family tree. Moving forward, the question is whether it's a dead end or not," Miller said. "Wireless is important, and what the Palm VII has done is get wireless into the development community and the market place. Will the actual design survive? I don't know."