Worldwide demand for handheld devices is declining

The worldwide market for handheld devices experienced its third successive quarter of year-over-year decline in the third quarter of 2004. Despite strong shipments from top five vendors Hewlett-Packard and Dell, the market continued to shrink due to a drop in shipments from market leader palmOne and the ongoing withdrawal of former number 3 vendor Sony. According to IDC’s Worldwide Handheld QView, device shipments decreased 4.6% sequentially and 8.7% year over year in 3Q04 to 2.1 million units.

Consolidation in the worldwide handheld device market continues with the exit of top vendors Sony and Toshiba from international competition nearly complete. Meanwhile, lower barriers to entry are enabling companies with established core competencies in electronics design and manufacturing to enter the market and quickly gain share, although this share comes at the expense of margins in the face of a flat or slightly shrinking market. As a result, success in the handheld market is increasingly equated with the ability to develop solutions that extend the handheld device into markets beyond core personal information management (PIM) functionality.

"In the face of intense competition from converged mobile devices capable of performing basic personal information management tasks, the worldwide handheld device market continues to struggle to evolve beyond its primary role as a PIM device," said David Linsalata, analyst in IDC's Mobile Devices program. "It is crucial that vendors push handheld devices into new market segments through the integration of existing technology such as GPS bundles in order to energize this market and return it to a growth path.”

Rank	Vendor	3Q 2004 Shipments	3Q 2004 Market Share
1	palmOne	736,481	34.7%
2	Hewlett-Packard	648,975	30.6%
3	Dell	188,200	8.9%
4	MiTAC	68,500	3.2%
5	Sony	44,192	2.1%
	Other	436,644	20.6%
	Total	2,122,992	100.0%

Source: IDC