Difficult Smart Handheld Devices Market Continues Impressive Growth In 1998 Reports IDC

FRAMINGHAM, Mass., Jan. 12, 1998 — 1998 should be a banner growth year for the smart handheld device market as unit shipments are expected to hit 8.2 million units, according to a report issued today by International Data Corp. The projected growth represents a 61.1 percent increase over estimated 1997 unit shipments of 5.1 million units. While the market outlook is solid, IDC concludes the lively handheld arena is an extremely challenging one for its increasing array of products and vendors.

"The handheld market is like navigating a maze — those vendors that experience near perfect execution will realize success, while choosing the wrong route can lead to a dead end," said Randy Giusto, IDC's director of worldwide mobile

technology research.

Key findings from the report include

New devices based on Microsoft's Palm PC design are not expected to have a large impact in 1998, as vendor announcements and product availability will be sporadic throughout the year.

3Com's PalmPilot, the market's most recent blockbuster product, is expected to maintain its success this year, driven by corporate adoption, an expanding array of specialized applications as well as product and pricing enhancements.

Success will remain elusive for Windows CE vendors who do not have the sales, service and support capabilities to provide solutions to medium and large businesses.

New product categories such as smart phones will remain limited in 1998, as the U.S. remains a small market, behind Japan and Western Europe.

Vertical application device growth is expected to remain steady as users upgrade to new technology, and vendors accelerate international expansion plans.

The fight for dominance in handheld operating systems is one of the market's major issues. IDC expects 3Com's PalmOS to command 37.6 percent of worldwide operating system market share for handheld companions in 1998, while Windows CE

is expected to command 29.9 percent.

"Shipment results of Windows 1.0-based devices were a disappointment in 1997 as products debuted sporadically throughout the year, and the anticipation of Windows 2.0 hurt existing products in the channel," said Diana Hwang, IDC's

senior industry analyst for smart handheld devices. "Windows CE 2.0-based devices should boost the market in 1998 and the platform should gain share, as long as vendors can provide exciting, easy-to-use products."

IDC also believes Windows CE 2.0-based devices with richer functionality will be a market driver for smart handheld sales to corporations in 1998 and beyond. However, new device announcements supporting Windows CE 2.0 and PalmPC may be

spread throughout 1998, limiting corporate penetration. "Users will wait for more competitive products later in the year," said Giusto. "Without a coalescing of hardware announcements and product availability shortly after Microsoft's launch, it will be difficult for new versions of Windows CE to duplicate the major success the PalmPilot has enjoyed."

Boom or Bust? The Worldwide Smart Handheld Devices Market Forecast, 1997-2001 (IDC #B15113), is a revised forecast of the worldwide handheld market for each technology form factor within this industry. It contains forecasts for unit shipments, shipment value (US$), and average system value (US$). The report also contains 1H97 U.S. and worldwide market share by form factor. This report is available for purchase by contacting Cheryl Toffel at 800-343-4952.

Form factors forecasted in the report include: PC companions such as Sharp's Zaurus, Psion's Series 3 and 5, and various Windows CE 2.0 devices; personal companions such as 3Com's PalmPilot, Sharp's Mobile Organizer SE-500, and newly

announced PalmPC devices; PDAs such as Apple's Newton MessagePad and the Japanese version of the Sharp Zaurus; smart phones such as the Nokia 9000; and pen tablets, pen notepads, and keypad handhelds from vendors such as Intermec, Symbol Technologies, and Fujitsu Personal Systems.

About IDC's Smart Handheld Device research

IDC's Smart Handheld Device research program includes reports based on end-user usage and demand, in-depth forecast and analysis of the U.S. and worldwide smart handheld device market, U.S. handheld distribution channels, ruggedized devices, vertical market case studies, as well as a biweekly newsletter. For additional information, please contact Dara Queen at 508-935-4585, or via email (dqueen@idcresearch.com).

About IDC

Headquartered in Framingham, Mass., International Data Corporation provides IT market research and consulting to more than 3,900 high-technology customers around the world. With a global network of more than 300 analysts in more than

40 countries, IDC is the industry's most comprehensive resource on worldwide IT markets, products, vendors, and geographies.

IDC/LINK, an IDC subsidiary, researches and analyzes the home computing market, leading-edge technologies in telecommunications and new media, and the convergence of computing and consumer electronics.

IDC's World Wide Web site (http://www.idc.com) contains additional company information and recent news releases, and offers full-text searching of recent research.

IDC is a division of International Data Group, the world's leading IT media, research and exposition company.