PDA sales slow, but double digit growth forecasted

While the hype surrounding wireless services seems to be growing, sales of personal digital assistants (PDAs), the devices needed...

While the hype surrounding wireless services seems to be growing, sales of personal digital assistants (PDAs), the devices needed to use such services, are slowing, according to Cahners In-Stat Group.

Total shipments of PDAs grew 17% in 2001, with 8 million units shipped during the year. However, this increase is noticeably down on the 36% growth seen in 2000, when 6.8 million units were shipped, said Neil Strother, senior analyst at Cahners In-Stat/MDR.

The slower growth rate can be blamed on several factors, including the stagnant global economy and problems at market leader Palm, which endured mounting inventories and the resignation of chief executive Carl Yankowski, Strother said. Also, higher-end models are still too expensive for consumers and businesses in the current economic climate, he said.

The report forecasts an 18% growth rate for 2002, citing the entrance of new companies into the market, and the development of devices with more functionality and reliability. Consumers still drive sales of PDAs, and when they feel more secure financially, they will look to start purchasing the devices again, Strother said.

"Business customers probably won't implement laptop-like deployment [of PDAs] for another couple of years, but more and more enterprises are starting to show interest in them. Companies that can afford it, and can see a healthy return on investment will deploy," he said.

The market for PDAs should continue to experience double-digit growth over the next few years, peaking at 30% in 2004, the report says.

In a development that might stimulate sales of new PDAs, Palm has showed off its new core operating system at the Palmsource conference in San Francisco. Palm unveiled Palm OS 5, which features increased security, better support for 802.11b wireless LANs, and improved screen resolution. Palm OS 5 will also run on ARM-designed chips, which have more than double the power of existing processors, said David Nagel, president of PalmSource, the newly created spin-off of Palm, which will focus just on operating systems.

Palm is currently the clear market leader for PDA operating systems, followed by Microsoft's Pocket PC and Windows CE, Cahners' report said.

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