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Pocket PC gains on Palm in Europe

Although Palm leads the market for handheld computers, Microsoft and its allies are catching up, partly because of increased corporate sales, a survey says.

Although Palm controls the lion's share of the market for handheld computers, Microsoft and its allies are catching up in Europe, partly because of increased corporate sales, according to a recent survey.

Devices based on Microsoft's Pocket PC operating system last year gained ground rapidly in European sales against rival Palm, according to Context, a market analysis firm based in England.

By December, Palm's market share had dipped slightly to 55 percent, from 59 percent in January 2000. By contrast, Hewlett-Packard and Compaq Computer, the two largest manufacturers of Pocket PC devices, combined for 31 percent of the market, up from a combined 18 percent at the start of 2000. Casio and other Pocket PC manufacturers conspired for a few percent more.

"In the latest iteration of Pocket PC, they seemed to have got it right," said Jeremy Davies, senior partner of Context.

The firm's numbers are based on interviews with and surveys of distributors and resellers in seven of Europe's largest economies. The survey considered both business and consumer sales, but not direct sales. In the United States, Palm and Handspring, whose devices are based on the Palm OS, dominate the retail market.

The gap should shrink in 2001, Davies said, because of increased sales to corporations, where Microsoft's allies appear to be carving out an advantage. Currently, corporate Palm users typically buy handhelds on their own and expense the cost. Corporate IT managers, on the other hand, are putting Pocket PC-based devices on their own purchasing lists.

The distinction is important because IT managers often buy products in huge quantities and can begin to swing market share figures.

"These are becoming more like tools that are handed down as part of the official corporate hardware," said Davies, who added that corporate buying has proved to be a boon for the entire handheld market. "We're seeing these things being picked up by the thousands in corporations."

The decline of Psion and increased availability of products has also helped the Microsoft camp. "The pent-up demand in Europe is finally being met," Davies said. He's on his second Compaq iPaq. The first was stolen.

The handheld numbers underscore a cautiously optimistic tone for computer purchasing in the Old World. For the first quarter, unit shipments of computers, notebooks and servers in Europe should increase by approximately 9 percent. Last year, Europe grew by 8 percent. In the United States, some analysts are predicting a decline in sales.

"The results are cautiously encouraging," Davies said. "We're not as quarterly focused as you are in the U.S. We don't have the same kind of overriding pressure from Wall Street."