Worldwide Handheld Device Market Starts 2006 with Continued Decline in Shipments, According to IDC

FRAMINGHAM, MA – APRIL 27, 2006 – Following a holiday quarter in which worldwide shipments of handheld devices topped two million units, the worldwide market for handheld devices began 2006 with its ninth consecutive quarter of year-over-year decline. According to IDC's Worldwide Handheld QView, worldwide shipments of handheld devices totaled 1.5 million units, down 22.3% from the same quarter a year ago.

Despite the incorporation of features like Bluetooth, Wi-Fi, expandable memory, and integrated GPS solutions, the handheld market continues to shrink. Many of these same features can be found on mobile phones, and the inclusion of telephony extends the usability of mobile phones beyond that of handheld devices. Still, vendors continue to search for ways to keep their products viable within this space by appealing to first-time and core users, or even joining the converged mobile device (i.e. smartphone) space altogether.

"A decline in shipments following the holiday quarter is expected of mature markets, and the handheld devices market is no different. After nine consecutive quarters of year-over-year decline, many are wondering how long this trend will continue, and whether the market will see a reverse," says Ramon Llamas, research analyst with IDC's Mobile Markets team. "IDC believes that the market will eventually hit a size where the rate of year-over-year decline will slow to a sustainable level. That size has yet to be determined, but will be sustained by the core users of handheld devices as well as the enhancements found on these devices."

Vendor Highlights

— Palm, Inc. Palm started off 2006 in much the same way it ended 2005: as the worldwide leader in the handheld market. With shipment volumes 23.3% lower than a year ago, the U.S.-based company was buoyed by the success of the Palm Tungsten E2 and the Palm Z22 handheld. At the same time, shipments of Palm's line of Treo smartphones continue to increase, surpassing shipments of its handheld devices.

— Hewlett Packard. Also feeling the effects of the declining market, HP's handheld device shipments decreased 30.3% year over year. With both its professional and home office handheld device lines running on Windows 5.0, HP remains the worldwide leader in Microsoft-powered handheld devices. The company's converged mobile device line also had a year-over-year decrease, but new devices are expected to ship later this year.

— Dell. Despite a decline of 33.8% in shipments from a year ago, the U.S.-based company remained the number three vendor worldwide. As the Axim x30 and x50 model lines have reached the end if their product life cycles, Dell has emphasized its x51 lines, which offer greater processing power and features over the other models.

— Acer. Of all the vendors in the top five, Acer had the smallest year-over-year decline at 10.8%, staying ahead of fifth place Mio. The company's shipments within Asia/Pacific remained steady while shipments into Europe declined slightly. The company's latest device, the n300, joins a portfolio of Acer's devices that include expandable memory, Bluetooth, and WiFi features.

— Mio. Rounding out the top five is Mio, whose shipment volumes increased enough in Europe and Asia to post a healthy year-over-year increase and to edge out Medion for the final spot. Mio was the only vendor within the top five to record a year-over-year increase at an impressive 84.4%. The company continued to offer a suite of handheld devices targeted at different segments of the market, featuring Bluetooth, WiFi, and imaging capability.

Top 5 Vendors, Worldwide Handheld Device Shipments and Market Share, 1Q 2006 (Preliminary)

Vendor Q1 2006 Shipments Q1 2006 Market Share Q1 2005 Shipments Q1 2005 Market Share 1Q06/1Q05 Growth

Palm 475,000 32.2% 619,253 32.6% -23.3%

HP 346,000 23.5% 496,755 26.2% -30.3%

Dell 143,100 9.7% 216,229 11.4% -33.8%

Acer 110,688 7.5% 124,084 6.5% -10.8%

Mio 104,609 7.1% 56,720 3.0% 84.4%

Others 294,849 20.0% 385,482 20.3% -23.5%

TOTAL 1,474,246 100.0% 1,898,523 100.0% -22.3%

Source: IDC Worldwide Handheld QView, April 26, 2006

Notes:

— Vendor shipments are branded shipments and exclude OEM 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 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 their required 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. Over 850 IDC analysts in 50 countries provide global, regional, and local expertise on technology and industry opportunities and trends. For more than 42 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 http://www.idc.com.

###