The smart phone segment of the mobile market, which includes devices such as the Orange SPV and Sony Ericsson P800, will be around 3.3 million units in 2003, compared with around 2.8 million for handhelds and wireless devices, such as the Palm Tungsten T, the HP iPAQ series and the RIM Blackberry.
"We anticipate that smart phone shipments alone will be an order of magnitude greater in 2003 than in 2002," said Andy Buss, senior analyst at Catalys.
"Last year was the tip of the iceberg for this category of device, but we expect the handheld segment to grow in 2003 too, after performing poorly in 2002."
Today's wireless handhelds make poor phones and are mostly bulky, expensive and feature-poor compared to the leading non-wireless handheld models, said Chris Jones, director and senior analyst at Canalys.
"Most people will want a separate mobile phone anyway, so they are better off going for one of the smaller, lighter handhelds to use with it via Bluetooth," he said.
"Unless you have a very specific application that needs the unique characteristics of a wireless handheld it is hard to see why you would choose it over any of the other form-factor combinations," Jones added.
While handhelds make poor phones, the new generation of mobile phones are improving in their ability to act as personal organisers.
"In 2002 the Nokia 7650 feature phone was the device that took the market by storm, but it was bought as a camera phone rather than as some kind of handheld replacement. While it can do many of the things traditionally associated with a handheld, that isn't where it excels,” he said.
“But if you look at devices like the Sony Ericsson P800 you can see that improvements are being made and gradually a lot of people will realise that the benefits of having just one device outweigh the usability compromises they may have to make. There will be users that prefer the larger screen and other characteristics of a handheld, and that's why we expect handheld shipments to continue growing for the next few years.”Despite the positive projections for smart phones, Canalys said that less expensive phones offering little more than colour, MMS and an integrated camera in a compact format are likely to appeal to many more consumers and will limit sales of true smart phones until users and retailers develop their understanding of what additional benefits the more sophisticated devices can bring.