PDA sales soft till end of year

Gartner's interpretation of Gartner Dataquest's research...

In the second quarter of 2002, a slump in the personal digital assistant (PDA) market continued. Gartner expects market leadership will gradually shift away from current market leader Palm and towards Microsoft. Event
On 1 August 2002, Gartner Dataquest said year over year, the worldwide PDA market during the second quarter of 2002 declined in units by 3.5 per cent while revenue from end user spending increased 1.5 per cent. First Take
The worldwide PDA market is in a slump and Gartner believes the poor economic conditions contributing to the decline will likely continue through the end of 2002. Palm may get a lift from its OS 5-based PDAs. However, there will not be any new Palm OS 5 applications available until 2003, so the new hardware will merely run existing software faster.
Much of the erosion of Palm's base has come from Sony, which runs Palm applications. If Palm or Sony could ship an OS 5 device in time for the back-to-school season, they could be richly rewarded. Otherwise, vendors will be left with only the holiday season to make up for what has been a disappointing year. The first Palm OS 5-based PDAs should enter the market by October 2002. These devices should provide the roughly 10 million users of Palm OS devices that are more than 18 months old with some comfort to upgrade to the next-generation platform. Wireless applications will drive the next generation of PDAs, with email the first wireless application most enterprises will look for. Only Research in Motion (RIM) has a robust wireless email platform at this time. Microsoft still has much work to do and Palm is working with IBM to enhance its wireless capabilities. In the present environment, pricing pressures will likely mount. Vendors with the lowest cost structures will likely ride out this slump. The rumoured entry of Dell into the PDA market in November 2002 should make cost reduction a high priority. In theory, Dell's entry should heat up the market but it could also cause many customers to postpone PDA purchases if they cannot get their hands on a low cost Dell PDA. Dell does not have sufficient manufacturing capacity to serve the whole market, so those who cannot get their hands on a Dell in Q4 02 may wait until 2003 rather than buy a PDA from another manufacturer. PDAs are entering a period in which they will be embraced by enterprises as core infrastructure, like PCs. This portends a gradual shift away from Palm and toward Microsoft. Although Palm devices remain more prevalent in enterprises, Microsoft has been adept in providing the building blocks enterprises require. Most companies Gartner talks with are moving with, or planning to move with, the Microsoft wave.