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Report: Reborn PDAs to thrive

Analysts say shipments of PDAs will grow by 18.3 percent over the next few years--but only if manufacturers reinvent the devices with multimedia and wireless doodads.

Handheld makers will see shipments grow at a healthy clip over the next few years, but only if they give their gadgets the oomph needed to win over new buyers, according a new report.

Worldwide shipments of personal digital assistants (PDAs) are expected to reach an 18.3 percent compounded annual growth rate from 2002 to 2007, according to a report released Tuesday by In-Stat/MDR. However, to do this, the PDA industry must keep striving to reinvent the form and features of its devices and convince consumers they are not just PC-related gadgets, say the report's authors.

The trend to bulk up devices is a response to rising competition from smart phones--such as Sendo's "feature phone"--which are starting to incorporate PDA features such as personal information management (PIM).

"I don't feel PDAs will be pushed out the door, but we're entering a new era where PDAs need to find their place. Over time, the PDA will morph into more form factors and incorporate such features as video, or grow into mini-laptop computers," said Cindy Wolf, an In-Stat research analyst.

The PDA industry is taking steps such as adding multimedia features and wireless Web access. For example, 15 percent of PDAs shipped last year could access the Internet. That functionality is expected to reach upwards of 75 percent by 2007, according to the report, which is titled "Multimedia and Wireless Functionality: Changing the Way Consumers Perceive PDAs."

At the same time, developments in PDA processors increasingly allow manufacturers to offer a better user experience by providing improved power consumption and support. In addition, flash memory cards are gaining greater capacity, allowing makers to add multimedia and Wi-Fi wireless services to products.

"We're seeing Wi-Fi and memory integrated into one card, so you don't have to chose between more memory or using a peripheral device," Wolf said.

Wireless and communications features are expected to give a big boost to high-end PDAs this year. Manufacturers are ramping up the choices for 802.11 and Bluetooth wireless models, according to the report.

In addition to creating PDAs with a greater variety in functionality and size, device makers are lowering prices and introducing split price tiers--low-, medium- and high-end--for products. Palm, for example, debuted a $99 Zire handheld for the budget market last October. Other industry titans such as Dell Computer are also getting into the low-end market.

All of this is expected to drive worldwide shipments to approximately 15 million units this year, according to the report. Last year, approximately 12 million units shipped--virtually flat from the previous year, the result of a languishing economy, a drop in U.S. consumer confidence and lower corporate technology spending.