Worldwide Handheld Device Market Continues Downhill Slide As Major Vendor Exits the Market, IDC Finds

FRAMINGHAM, MA – MAY 15, 2007 – The worldwide handheld device market opened the year with its thirteenth consecutive quarter of year-on-year decline as user interest continued to transition towards converged mobile devices and other consumer electronics devices. According to IDC's Worldwide Handheld QView, vendors shipped just over 900,000 handheld devices in the first quarter of 2007, 36.3% less than the previous quarter and 40.6% less than the same quarter a year ago. The decrease in shipments coincides with the announcement that one of the leading vendors, Dell, is leaving the industry.

" Dell's exit from the handheld device market underscores the market's decline," says Ramon Llamas, research analyst with IDC's Mobile Device Technology and Trends team. "The features found on a handheld device are not exclusive to handheld devices. Personal information management, the key feature that once distinguished handheld devices, can now be found commonly on converged mobile devices. The growing popularity of converged mobile devices combined with declining prices for laptop computers have put tremendous pressure on the handheld device market. The addition of multimedia and GPS features onto handheld devices did not stem their decline because standalone multimedia players and personal navigation devices grew in popularity. The growth in these other segments have come at the expense of the handheld device as vendors have responded eagerly with new, feature-rich products."

Top Five Handheld Device Vendors, Q1 2007

Palm stood out as the clear leader among all handheld device vendors during the quarter, but even it was not immune to the decline in shipments, dipping below the 300,000 unit mark. Consequently, Palm saw its lead over second place HP shrink to less than 100,000 units. Palm has yet to introduce a follow-up to its Palm Z22 and Palm TX devices which were introduced to the market in late 2005, but remains committed to this space as the company believes a core group of loyal users exists for handheld devices. At the same time, the company has since launched several new Treo converged mobile devices, which have generated more revenue for the company.

HP remained the clear number two vendor worldwide, but nonetheless saw its shipment volumes decline. HP has not been shy about introducing new devices to the market, and launched its rx4240 Mobile Media Companion and rx5915 Travel Companion to the market, optimized for multimedia and navigation respectively. HP has also been developing its converged mobile device line-up, and recently announced its 510 Voice Messenger, its first non-QWERTY converged mobile device to the market.

Mio gained further clarity as the number three vendor worldwide, distancing itself further from fourth place Dell and posting the only positive year-on-year change among the leading vendors. Mio's year-on-year gains came with the introduction of two new devices to its product portfolio, the P350 and the P550. Like many of its previous handheld devices, Mio leads with GPS capability in addition to its PIM functionalities.

Dell began 2007 with shipments below the 100,000 unit mark for the first time since late 2002. With no announced replacement to its Axim X51 series, Dell will instead sell third party devices on its website while still providing support to its own devices. Shipments are expected to continue during the year in order to clear out remaining inventory.

Sharp rounded out the top five with shipments of its Zaurus product line, but registered the largest year-on-year decline of the leading vendors. Unlike other vendors, all of Sharp's devices arrived in Japan. Following Sharp is a short list of other vendors, including Medion, ASUSTeK, and Acer, all of which posted similar year-on-year shipment declines.

Top Five Vendors Shipments, Market Share, and Year-Over-Year Delta, Q1 2007 (Preliminary)

Vendor Q1 2007 Shipments Q1 2007 Market Share Q1 2006 Shipments Q1 2006 Market Share 1Q07/1Q06 Growth

Palm 295,250 32.1% 475,000 30.7% -37.8%

HP 199,400 21.7% 346,000 22.3% -42.4%

Mio 138,631 15.1% 104,609 6.8% 32.5%

Dell 78,000 8.5% 143,100 9.2% -25.4%

Sharp 44,000 4.8% 99,000 6.4% -55.6%

Others 164,635 17.9% 381,490 24.6% -56.8%

Total 919,916 100.0% 1,549,199 100.0% -40.6%

Source: IDC Worldwide Handheld QView, May 7, 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.

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