PDA sales surge in Q1 on GPS, e-mail, Gartner says

PDA sales surged in the first quarter as former market leaders like RIM and Palm left the segment, Gartner said.

Even though major vendors have shifted their focus to expensive and profitable smartphones, shipments of PDAs (personal digital assistants) jumped nearly 40 percent in the first quarter of 2007, according to a new survey

The result came from higher-than-expected customer demand for devices with GPS (global positioning system) navigation and low-cost e-mail functions, according to a Gartner study released Tuesday.

In recent quarters, hardware vendors like Research in Motion (RIM) and Palm have begun to move their product lines from PDAs to smartphones. That strategy took its toll in the first quarter, with RIM shipping 0.2 percent fewer units than last year, and Palm dropping out of the top five in market share.

The vendors say that is exactly the result they wanted to see. In a quarterly earnings report in March, Palm said smartphone revenue rose from 28 percent in the third quarter of 2004 to 86 percent in the third fiscal quarter of 2007.

Despite Palm's stance, other vendors still see an opportunity in PDAs. Mio Technology had a 162 percent rise in PDA shipments in the first quarter, with particularly strong sales of its GPS-enabled car-navigation units in southern European countries, according to Gartner. Drivers there love GPS because they frequently cross borders on twisty roads marked in foreign tongues, said Gartner analyst Todd Kort.

Samsung Electronics Co. followed a different path to PDA success, rising from 2,150 shipments last year to 451,000 units shipped in the first quarter of 2007 thanks to a strong marketing campaign for its BlackJack wireless e-mail device by US-based Cingular Wireless. Mobile e-mail capability is attracting many companies and consumers to buy new handsets like the BlackJack and Motorola Q, Kort said.

"The market is moving very strongly with wireless e-mail," Kort said. "That and GPS are the biggest drivers, compared to the old PDA stuff that drove the market five or six years ago, the contact lists and calendars that are available on almost any device now."

Overall, the PDA market reached 5.1 million units shipped in the first quarter, up 39.7 percent over the same quarter last year, according to the Gartner study.

RIM held on to its top position with 18.1 percent market share, over Mio with 11.1 percent, Samsung with 8.8 percent, Sharp with 8.5 percent and Nokia Corp. with 6.2 percent. As a measure of RIM's effort to shift its product line to smartphones, its lead of 7 percentage points was down sharply from 18.5 percentage points in the same quarter last year.

Another effect of the decision by RIM and Palm to downplay the PDA market was to open the door for Microsoft to buttress its leading position in handset operating systems.

Microsoft shipped 3.2 million units of Windows CE in the first quarter, a rise of 64.4 percent over the same time last year. Meanwhile, the RIM, Palm and Linux OSes all lost share in that same year-over-year comparison, Gartner said. Windows CE led the PDA market with 62.1 percent market share, towering over the RIM OS at 18.1 percent, Palm OS at 6.1, Symbian at 5.6 percent and Linux at 0.7 percent.

Gartner defines a PDA as a data-first, voice-second device designed for use with both hands. That family does not include devices such as Palm's Treo 750 and the BlackBerry 8100 family, but does include cellular PDAs like the BlackBerry 8700.

Nevertheless, despite Gartner's upbeat report on PDAs, other industry observers stress that handheld devices without any phone capabilities at all are losing the interest of users. IDC, for example, tracks what they call handheld devices, defined as pocket-sized computers that may have Internet access and text messaging, but do not support telephony. IDC sees evidence of a shift away from these types of PDAs, illustrated by Dell Inc.'s decision to stop selling handheld devices entirely, according to IDC analyst Ramon Llamas.

As consumer interest swings quickly from simple handsets to feature-rich smartphones, the first quarter of 2007 marked the 13th consecutive quarter of decline in shipments of PDAs with no telephone abilities, Llamas said.

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