Handheld Device Vendors Benefit from Dell’s Departure, But Overall Market Still in Decline, Says IDC

FRAMINGHAM, MA – AUGUST 8, 2007 – According to IDC's Worldwide Handheld QView, vendors shipped a total of 720,000 units during the second quarter of 2007, a 43.5% decrease from the same quarter one year ago and a 21.8% decrease from the previous quarter. This marked the second consecutive quarter in which total worldwide shipments have not crested above the million unit mark.

Following Dell's decision to withdraw from the handheld device market, other vendors were able to increase their shipments and capture more market share during the 2Q 2007. Overall, however, the handheld device market experienced year-over-year decline as demand decreased and vendors transitioned their resources towards other product lines.

"The departure of a major player allows other vendors to fill the gap and increase shipments. But the market as a whole is still contracting and other vendors, with fewer resources and less distribution, may be forced to withdraw from the market altogether," says Ramon Llamas, research analyst with IDC's Mobile Devices Technology and Trends team. "With double-digit negative growth continuing to characterize the market, IDC expects the handheld device market to contract further before it reaches a stable point."

"Despite the ongoing decline, there continues to be a small but nonetheless significant demand for these devices," continues Llamas. "To drive ongoing demand, vendors have introduced a number of devices that offer features like multimedia, GPS, and wireless, but not cellular, connectivity. But even the inclusion of these new features have not stemmed the decline in shipments. Stability has yet to arrive."

Top Five Handheld Device Vendors

Palm maintained its position as the number 1 vendor worldwide, and its shipments for the second quarter were nearly double that of the number 2 vendor HP. In addition, Palm posted a sequential increase in shipments, bringing to a halt the three consecutive quarters of sequential decline. But even the market leader was not immune to a year-on-year decrease in shipments, as the company relied on devices, like the Z22 and the TX, that have been available for nearly two years.

HP was the clear number 2 vendor by the end of the second quarter, and although it posted both a sequential and year-on-year decline, the company pointed out that its volumes were larger than expected, the result of filling in the gap created by Dell's imminent departure from the market. HP has also been experimenting with optimized handheld devices, including the iPAQ rx 4240 for multimedia and the iPAQ rx 5915 for GPS. Both devices carried a higher price point compared to simple handheld devices, but still moved the handheld devices in a new direction.

Mio posted its fourth consecutive quarter of year-on-year growth, bucking the general trend of the industry and that of the other major vendors. To do this, Mio has relied on the popularity of its P550, P350, and A201 devices, all of which feature a GPS receiver, spreading beyond its home territory of Asia/Pacific and into nearby Europe and Japan. Only recently has the company begun targeting North America.

Dell continued the phase-out of its Axim devices in 2207, as the company's shipments decreased 81.8% from the same quarter a year ago. Dell managed to remain among the top five vendors, but only barely as a number of smaller, regional vendors came within range of Dell's volumes for the period.

Fujitsu-Siemens Computers took fifth place in the second quarter, and did so by concentrating its shipments primarily into Western Europe, unlike other vendors which benefited from a global footprint. While the company has offered both simple devices, like its C Series, and GPS and multimedia-enabled devices, like its N100 Series, it also recently began offering a competing converged mobile device with its with its T Series device.

Top 5 Vendors, Worldwide Handheld Device Market, Second Quarter

2007

Vendor 2Q07 Shipments 2Q07 Market Share 2Q06 Shipments 2Q06 Market Share 2Q07/2Q06 Change

1. Palm 317,300 44.1% 475,000 37.6 % -33.2 %

2. HP 168,800 23.5 % 260,000 20.6 % -35.1 %

3. Mio 97,691 13.6 % 91,700 7.3 % 6.5 %

4. Dell 23,975 3.3 % 132,050 10.4 % -81.8 %

5. Fujitsu Siemens 21,482 3.0 % 28,529 2.3 % -24.7 %

Computers

Others 89,682 12.5 % 277,404 21.9 % -67.7 %

Total 718,930 100.0 % 1,264,683 100.0 % -43.2 %

Source: IDC Worldwide Handheld QView, August 8, 2007

Notes:

* Vendor shipments are branded shipments and exclude ODM sales for all vendors.

* Handheld devices are pocket-sized, either pen or keypad-centric, and are capable of synchronizing with desktop or laptop computers. Handheld devices are designed to access and manage data including office documents, multimedia, and games.

* Handheld devices do not include telephony but may include wireless capabilities (like Bluetooth and WiFi) that enable Internet access and text communication. These devices feature evolved operating systems or applications environments such as the Palm OS, Windows Mobile Pocket PC, Linux, or other proprietary platforms with the ability to download, run applications, and store user data beyond PIM capabilities.

IDC's Worldwide Handheld QView provides device vendors, software developers, service providers, and component suppliers with timely and accurate information on the worldwide handheld market. The program provides quarterly measurements of worldwide unit shipments and vendor market shares.

For more information about IDC's Worldwide Handheld QView Program, please contact Jonathan Guloyan at 508-935-4296 or jguloyan@idc.com.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 900 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 90 countries worldwide. For more than 43 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com .

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