Mobile market to sag until late next year

IDC projections find that enterprises are staying away from spending on mobile devices as the economy continues to falter
Written by Matthew Broersma, Contributor

IDC is predicting that the market for mobile devices like PDAs and smartphones will not pick up until the second half of next year, a situation largely caused by corporate unwillingness to spend on mobile device deployment.

The forecast springs from an upcoming report on the fourth-quarter market for mobile devices now in preparation. IDC expects the fourth quarter to remain slow, which will lead enterprises to continue postponing the rollout of new hardware.

"Q4 doesn't look to be that positive," said Andy Brown, IDC's European research manager for mobile computing. "There will be decent performance in the fourth quarter, but the full year won't be as great as all that. What is obvious with this economic situation is that non-essential projects are put on hold: wireless projects, the rollout of handhelds in enteprises and so on."

But enterprises also remain to be convinced by the latest crop of devices, especially those incorporating wireless connectivity. While Nokia's Communicator has been selling fairly well, similar devices from Trium, Sagem and others have seen lacklustre performance in the market. "Sales haven't been as great as perhaps one would have liked, they've been pretty slow," Brown said.

Sales of notebook computers reflect the general trend, Brown said: they were flat for the third quarter, following 4 percent growth in the second quarter. For the last quarter of the year IDC forecasts growth of about 0.9 percent. "Spending on devices with a high TCO (total cost of ownership) is not the done thing at the moment," Brown said.

The enterprise is expected to be the main driver of improved sales, but mobile device makers and service providers need to make a good case for their products' business value. Brown said the key lies with remote access to corporate data, something which has made Research In Motion's BlackBerry wireless handheld a success in the US, and which companies like Extended Systems are implementing in Europe.

A key technology will be GPRS (general packet radio service), which can enable always-on access to corporate networks. But while GPRS has been rolled out to some extent, in some handsets and in BT Wireless' version of BlackBerry, it does not appear ready for a mass market.

"They could be relying on there being a limited number of users initially," Brown said. As usage grows, "it will be interesting to see whether the infrastructure can cope with it," he said.

Because corporate budgets are being made now, in stagnant market conditions, there will be an inevitable lag before spending rises again, Brown said. Both Palm OS and Microsoft Pocket PC devices have been hit, he said.

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