Smart Handheld Device Market Will Enjoy Robust Growth in 1999 and 2000, According to IDC

FRAMINGHAM, Mass., May 25, 1999 — The smart handheld device (SHD) market continues to undergo healthy market growth, with 1999 worldwide unit shipments expected to total 8.9 million, according to a just-released forecast report by International Data Corporation (IDC). This volume represents a healthy increase of 34.5% over actual 1998 unit shipments of 6.6 million. By 2000, IDC expects growth to increase to 44.5% as the industry continues to see strong demand for the $300 personal companion segment, a growing interest for sub-$200 devices based on the Palm OS and Windows CE, and the emergence of new smart phones from major handset suppliers.

"There is a rising interest for deploying smart handheld devices in the enterprise to meet the needs of the mobile workforce. This demand will become a key factor in driving the accelerated growth for the SHD industry," said Diana Hwang, research manager with IDC's Smart Handheld Devices program.

From a regional perspective, the United States accounts for 45% of worldwide SHD shipments today, but Western Europe and Japan will quickly become stronger areas of growth in the handheld companion and emerging smart phone markets.

"There is a need for a low-cost integrated wireless device and value-added service that enables users to conduct voice calls, send and receive short e-mails, and access snippets of Internet data," Hwang said. "Regions such as Western Europe and Japan are poised to be the market leaders due to their wireless infrastructure and propensity for adopting cellular technology."

On the competitive front, IDC believes 3Com will continue to be the leading vendor in the overall SHD market in 1999 due to the strong demand for the Palm platform. In fact, 3Com garnered 27.1% of the worldwide SHD market in 1998, followed by Sharp Electronics with 7.7%. In the handheld companion market, 3Com enjoyed a market share of 42% in 1998, representing an 84% increase from yearend 1997.

Additional Highlights

The handheld companion market grew worldwide to 4.3 million units in 1998, lower than the previously anticipated 4.6 million units. These results were due to the flat performance of Windows CE hardware device vendors, as well as product delays in the Palm-size PC and H/PC Professional Edition (Jupiter) market.

The worldwide personal companion market closed at 2.65 million units in 1998, with 3Com shipping over 65% of that product segment. IDC anticipates shipments of nearly 4 million units in 1999 due to the anticipated success of the new Palm V platform and the entry of new Palm-size PCs from vendors such as Hewlett-Packard and Compaq Computer.

Y2K concerns, new product jitters, and a lack of market education affected the adoption of H/PC Pro Windows CE devices in enterprise markets, causing a market slowdown for this form factor. IDC believes enterprise buyers will remain conservative in their wide-scale deployment of H/PC Pro and use the rest of 1999 and 2000 as pilot test years for custom solutions.

Japan's handheld companion market will exhibit changes as users move from the classic PDA form factor and begin to embrace the smaller pen-based personal companion and keyboard-based PC companion segments.

Handheld devices will face increasing pressure from emerging technologies such as PIM-enabled pagers and smart phone solutions during the forecast period.

The smart phone market continued to grow, despite the low volumes of 654,000 units shipped worldwide in 1998. IDC expects the market to surge ahead in 2000 and 2001 as early technology adoption from regions such as Japan, new products based on the Symbian alliance, and interim two-piece solutions accelerate the market. Worldwide unit shipments for smart phones will earn a compound annual growth rate of 78.3% from 1999 to 2003.

The worldwide vertical application device industry continued to exhibit steady year-over-year growth despite the increasing competition from horizontal handheld vendors seeking new opportunities in traditional vertical markets.

Size Matters: The Worldwide Smart Handheld Devices Market Review and Forecast, 1999-2003 (IDC #B19319) is a revised forecast of the smart handheld devices market. It contains unit shipments, shipment value (US$), and average system price (US$) forecasts, as well as final yearend 1998 and 1997 U.S. and worldwide market share data. To order a copy of the report, contact Sue Beauregard at 1-800-343-4952, ext. 4774 or at sbeauregard@idc.com.

About IDC

International Data Corporation is the information technology industry's most comprehensive resource on worldwide IT markets, trends, products, vendors, and geographies. IDC provides data, analysis, and advisory services to the world's leading IT suppliers as well as IS professionals in finance, insurance, entertainment, advertising, consumer goods, and publishing. IDC's research and opinions are based on the results of more than 300,000 end-user surveys, in-depth competitive analysis, broad technology coverage, and strategic analysis. IDC is committed to providing global research with local content through its 500 analysts in more than 40 countries worldwide. Additional information on IDC can be found on its Web site at http://www.idc.com.

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

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