2000: The year PDAs grew up

Summary:They didn't get bigger, but they sure got better. Even greater leaps are expected in 2001 as the market matures and more manufacturers define their niches.

The market for personal digital devices enjoyed a year of high-octane growth in 2000. But unlike 1999, when PDAs were considered more of a tool for mobile professionals, this was the year the market went consumer.

"That you can find PDAs in Target and Wal-Mart is a clear indication that PDAs are a consumer play," said Gartner analyst Abha Garg.

Looking to the new year, analysts expect consumer demand to remain strong even though PDA manufacturers will be under pressure to remain nimble as they fend off new entrants. At the same time, Microsoft's Pocket PC-based devices have become more competitive with the addition of slimmed-down, stylish cases.

Still, analysts and company executives believe there's more than enough demand to profitably support all the players without triggering a shakeout.

"Our product lines will diverge as the market grows. Different strategies and markets will emerge," said Handspring's co-founder, Jeff Hawkins. "So far, it's clear that we are expanding the market and not taking away users from one another."

Palm chief technology officer Bill Maggs agreed saying, "the market is growing fast enough that all licensees can benefit. Handspring started rapidly but Palm was still able to make our numbers."

Handspring managed to ship its one-millionth unit after just one year in business yet Palm was still able to sell 4.4 million units this year, according to the company.

"A market with only a few players isn't a real market," said IDC analyst Kevin Burden. "What's significant, though, is that new players are addressing new niches, which will help growth. It's a sign that the market is growing up."

PDA unit shipments nearly doubled to 9.4 million in 2000 compared to 5.1 million the previous year, according to Gartner Group. And both Gartner and IDC expect PDA shipments to be in the 30-million range worldwide by 2004.

"A lot of the current players are addressing different markets," said IDC's Burden. "If one company leaves out a certain feature for the sake of elegance another picks it up."

Sony is targeting the consumer lifestyle and will add more entertainment features to its device. The consumer giant has a significant pool of content from within the company to draw from but also plans to use complementary content from third parties.

Handspring will continue to focus on expandability. Recently the company released a list of shipping modules that included phone, GPS, MP3 player and camera add-ons. The list included 25 modules with 15 announced Springboard peripherals on the way.

Palm (palm) made it clear at this year's developers' conference, PalmSource, that its next frontier is the enterprise market. But the company is also focusing on wireless and will work to make its personalized portal interface, MyPalm.com, available worldwide next year.

Microsoft (msft) and its Pocket PC hardware vendors will continue to address corporations.

Two currently nascent categories that will help to expand the PDA market are pagers and smartphones, according to ARS analyst Matt Sargent.

Research In Motion, with its popular Blackberry pager, has been active signing up licensees. Already onboard are Compaq, AOL and Motient, and the trend should continue.

And the recently announced Samsung smartphone--based on the Palm OS-- will be available in the U.S. in the second quarter of 2001. Kyocera also announced its smartphone based on the Palm OS.

The company is also expected to push into wireless with new devices such as the smartphone, which is expected late next year in the U.S.

About the only thing that might slow growth is the component shortage that plagued the entire industry. Flash memory and LCDs were in short supply because of near-overnight popularity of cell phones. PDAs were hard to come by and will continue to be until the middle of next year.

Topics: Hewlett-Packard, Hardware, Microsoft, Operating Systems, PCs, Smartphones

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