Brace yourselves for Sony's handheld

The news that Sony is entering the PDA market is both positive and negative for the consumer

If you read between the lines, the upcoming announcement that Sony Electronics is entering the PDA market is both good news and bad news for consumers.

A new device adds features and drives competition, but in the current, crazed handheld sector, it also brings new customers -- tightening an already thin supply of devices.

Sony is expected to jump into the PDA game in the third quarter, but this comes at a time when demand is already white-hot and supply is very short.

Analysts have attributed this to component shortages and a gross underestimation of demand on the part of manufacturers.

With the audience it has traditionally reached, Sony will only compound any component shortages with its foray into the market, said George Meier, marketing manager of NPD Group, assuming that Sony promotes the device as it has past products.

Falling prices and expansion of uses for handhelds are growing the market, but at the same time making it more difficult for consumers to get their hands on units.

NPD Group recently released sales estimates showing sales of PDAs to double this year compared with 1999. In the first half of this year alone, 1.3 million handheld devices were sold -- the same number as all of 1999.

Meier said the estimates did not take into account Sony's upcoming product, and that with this new player, sales are even more likely to double.

Sony officials did not return calls in time for this story.

Sales data from OneChannel.net shows a shortage of Palm units has affected the market since the second quarter, and that the situation has only gotten worse.

"Sales for Q2 were about 45 percent lower than Q1," said OneChannel.net's editor-in-chief, Lisa Stapleton, attributing the Palm drop-off to supply shortages, seasonal aspects of the market and increasing competition from Handspring. "Indeed, at the end of Q2, sales were about a third of what they were at the beginning of the same quarter."

Analysts and industry insiders expect the shortage to continue into the first quarter of next year.

Falling prices and expansion of uses for handhelds are growing the market, but at the same time making it more difficult for consumers to get their hands on units.

Palm continues to hold the biggest share of the market, but Handspring has made a recent charge, capturing about 20 percent of the market. In the Pocket PC camp, the iPaq from Compaq has been gaining buzz, but has also been held back by supply issues.

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