Handheld Device Shipments Down for Seventh Straight Quarter

The worldwide market for handheld devices experienced its seventh consecutive quarter of year-over-year decline in the third quarter of 2005, according to IDC’s Worldwide Handheld QView.

IDC reports device shipments decreased 16.9 percent year over year and fell 8.8 percent sequentially in third quarter of 2005 to 1.6 million units.

Even as the overall market continues to trend downwards, device manufacturers are steadily pushing forward with new product introductions, software upgrades, and solution deployment, particularly GPS. Given these improvements and the upcoming holiday season, IDC expects shipments to increase sequentially but decline year over year in the fourth quarter.

Growth of Converged Devices

At the same time, the growth of converged mobile devices, which combine voice and data capabilities in a single form factor, is placing heightened pressure on the handheld market. Those vendors who offer both devices are starting to see shipments of converged mobile devices equal or surpass shipments of handheld devices.

“The combination of tremendous competition from converged mobile devices with waning consumer demand for handhelds is forcing manufacturers to search for new or improved solutions that leverage existing hardware and software capabilities,” said Ramon Llamas, research analyst in IDC’s Mobile Markets program.

“Offering solutions beyond PIM, such as GPS, and reaching out towards first-time users are important steps, but will not necessarily bring about a return to growth. Finding and expanding more solutions to modern mobile consumers and enterprises have become imperatives for the handheld market to drive growth.”

Vendor Highlights

Leading the market is Palm, which experienced a 10.8 percent decline in shipments sequentially and a 22.7 percent decline year over year, according to IDC. For the first time, Palm’s shipments of converged mobile devices outpaced the company’s handheld devices. At the same time, the company augmented its portfolio with two new devices: the Z22, aimed at the first-time user, and the TX, targeted at advanced users on a budget.

IDC reported that, thanks to new product introductions in Europe and Asia/Pacific, HP grew 4.4 percent sequentially but decreased 35.4 percent year over year, maintaining its number 2 position. With devices aimed at enterprise and consumer users along a broad range of price points and its growing lineup of converged mobile devices, IDC said HP moves closer to balancing its portfolio across both markets.

Marking its third consecutive quarter in the Top 5 is Acer, which saw 5.3 percent sequential growth but an astounding 421.0 percent year-over-year growth. Holding steady in the number 4 position, Dell experienced a 9.6 percent sequential decline and a year-over-year decline of 13.9 percent in the third quarter. Dell updated its portfolio with the introduction of the X51v.

New to the Top 5 list this quarter is Mio, which experienced a sequential decline of 22.6 percent, but impressive 58.0 percent growth from one year ago. Like third place Acer, Mio was a smaller player a year ago with shipment levels that kept it well outside the Top 5. But thanks to the success of its GPS-enabled 168, 268, and 269-series product lines, IDC said the company was able to slip past previous number 5 vendor Yakumo.

Comparing Profitability

Yankee Group wireless analyst John Jackson told TechNewsWorld that wireless vendors are going to be challenged to compete profitably in anything beyond a regional sense.

“The real battle is being played out on the profitability front, the efficiency front, and the intellectual property front,” Jackson said. “Increasingly it’s not going to be sufficient to simply put out whiz bang devices. You need to have a broader solution-oriented approach to serving the market, whether it’s organic or partnership driven.”

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