Worldwide Handheld Device Shipments Declined 10.7 % from Previous Year in Q2 2003, According to IDC

FRAMINGHAM, MA – JULY 22, 2003 – The worldwide market for handheld devices continued to decline in the second quarter of 2003 due to seasonality and sluggish demand from businesses and consumers alike. According to IDC’s Worldwide Handheld QView, worldwide handheld device shipments fell by 10.7% year-on-year in 2Q03 and dropped sequentially by 10.2% to 2.27 million units. Palm Solutions Group maintained its top position in the market while Hewlett-Packard continued to solidify its standing as the number 2 handheld vendor.


"This quarter illustrates the handheld device market’s struggle to grow beyond its roots. Personal information management is a killer application for 30 million individuals worldwide, but handheld devices lack an application that will further expand their appeal and differentiate them from technologies targeting similar market segments," said Ross Sealfon, research analyst in IDC’s Smart Handheld Devices program. “Combined with worldwide economic uncertainty and an increasingly crowded market, handheld device vendors will have a difficult time building and maintaining market share."

After a surge in shipments around the holidays, the handheld device market declined in each of the past two quarters. In

light of other IT priorities and scarce funds, enterprises remain hesitant to invest in handheld device technology. Competition from alternative form factors and limited overall appeal continues to limit consumer interest as well. The decline in 2Q03 was not as steep as the decline experienced in the same quarter one year ago and such a reality, coupled with a brightening macroeconomic outlook, indicates that a more favorable environment for handheld device sales may exist in the second half of this year; such a recovery will also be aided by vendor upgrades of device capabilities and the further integration of wireless connectivity without a significant price increase.

QView Highlights

Palm – Buoyed by the sales of its Zire 71 and Tungsten C devices, Palm maintained its worldwide leadership status and expanded its market share to just under 40.0%. Also in 2Q03, Palm announced that its $99 Zire exceeded the 1 million unit shipment mark since its launch in October 2002.

Hewlett Packard – HP solidified itself as the number 2 handheld vendor on the strength of the $299 H1910. With the launch of five new devices in June the company is poised to increase market share.

Sony – Sony's market share declined from 16.5% in 1Q03 to 11.3% this quarter due to slower than expected sales of new models unveiled in March. Similar to HP, however, Sony launched new devices in June and July which the company hopes will re-energize sales.

Dell – Dell's worldwide shipments declined slightly this quarter due to an aging Axim product line and increased major brand competition. The company's progress in Europe and late quarter push in Asia, however, helped the company maintain its number 4 position.

Handspring/Palm – In early June, Palm announced that it will acquire Handspring in the fall. With Handspring's focus now on converged devices the acquisition will not help Palm in the handheld market, but will help to grow Palm's presence in the converged handheld device market.

Top 5 Vendors, Worldwide Handheld Device Shipments and Market Share, 2Q 2003 (Preliminary)

Vendor Q2 2003 Q2 2003

Shipments Market Share

1. Palm 903,096 39.9%

2. H-P 381,000 16.8%

3. Sony 256,000 11.3%

4. Dell 152,000 6.7%

5. Toshiba 75,600 3.3%

Other 496,965 21.9%

Total 2,265,261 100.0%

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 which enable Internet access and text communication. These devices feature evolved operating systems or application environments, such as the Palm OS, Pocket PC, Windows CE, Handheld PC 2000, Linux or proprietary solutions and have the ability to download and run applications and store user data beyond their required PIM capabilities.

Source: IDC, July 23, 2003

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.

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a division of IDG, the world's leading technology media, research, and events company. Additional information can be found at www.idc.com

# # #

All product and company names may be trademarks or registered trademarks of their respective holders.