So-called intelligent devices like cell phones, pagers, and screen phones are already shipping in high volume. And unlike TV set-top devices that replace many PC functions, consumers will likely own one or more of these mobile digital devices in addition to a PC.
International Data Corporation predicts a big year for these devices in 1999: The market for these smart devices will grow 45 percent to 10.7 million units, according to the market researcher.
Also, 3Com's PalmPilot has maintained a large chunk of the handheld market with a 41.4 share, up from 32.0 percent for the same period last year. "3Com continues to grow despite the threat of new Palm- size PC devices," IDC said.
But other areas will also see growth.
"The area that we are most bullish on is in the cellular mobile arena," said Seamus McAteer, a Web technologies analyst for Jupiter Communications. "That's going to be driven by the addition of micro-browsers and email clients to conventional cellular handsets and growth in the smart phone arena."
"PCs are going to continue to fall in price, and if there's one thing we've learned, it's that old technology doesn't just roll over," he said. "PC penetration will continue to climb, and Internet appliances will co-opt certain functional elements of the PC for a specific domain."
Pager and cell phone makers in particular will be pushing services such as text-based email and limited Internet updates, McAteer said.
"It's a function of industry dynamics. Vendors must grow the average revenue per subscriber, and the way to do that is to convert alpha-numeric pagers to text-based paging, which becomes email. Internet connectivity is enabling utility, rather than displacing the PC. We view a lot of Internet devices as peripherals that will be used in conjunction with the PC," he said.
Jupiter projects several different categories of pagers and cell phones will emerge over the next few years. High-end cell phones and pagers with integrated organizers will share shelf space with lower-end models that simply receive specially formatted text information, he said.
Similarly, screen phones will appear in different flavors, offering varying forms of interactivity. Some will merely offer caller ID or email alerts, while higher-end versions will be able to access the Internet through a separate phone line.
Unlike the complicated world of set-top appliances, which is awash in competing technologies, consumers won't have to worry as much about smart cell phones or pagers made obsolete by standards battles.
"This is not about Silicon Valley. This is consumer electronics," McAteer said. "[Manufacturers] are not worried about Java or [Windows] CE, and consumers aren't going to care either way, once they get compelling services."
But IDC warns that the smart phone market is still too new and that its nascent state will prevent it from growing leaps and bounds. "The smart phone market continues to perform under expectations due to high device costs, continuing product delays, and wireless infrastructure issues affecting the U.S.," IDC says.
IDC also asserts that for the market for Windows CE handhelds to be successful, "vendors must pass several hurdles including educating the market and managing user expectations. Vendors also need to provide PC-style service and support programs, and align device price points so they do not collide with low-cost notebooks."
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