Worldwide Handheld Device Shipments Reach 5.5 Million Units in 2006, Down 28.5% From 2005 Levels, According to IDC

FRAMINGHAM, MA – FEBRUARY 8, 2006 – The worldwide handheld device market slumped further at the close of 2006, despite several notable vendors posting seasonal increases in shipments. According to IDC's Worldwide Handheld QView, vendors shipped 5.5 million units in 2006, down 28.5% from the 7.6 million units shipped in 2005. For the quarter ending December 31, 2006, vendors shipped a total of 1.5 million units, or 35.9% less than the 2.3 million units shipped during 4Q05.

"The handheld devices market is under intense pressure from networked mobile devices," says Ramon Llamas, research analyst with IDC's Mobile Devices Technology and Trends team. "Features found on handheld devices, including personal information management (PIM) functionality, multimedia, and Bluetooth connectivity have also been included on converged mobile devices (commonly known as smartphones) and high-end phones. The proliferation of notebook computers with embedded wireless WiFi has also allowed users to remain connected while on the go, further reducing the demand for handheld devices. Finally, GPS devices have gained momentum in the marketplace, and also negatively impacted handheld devices.

"Handheld vendors have expanded their portfolios to include networked devices, and put greater focus on the latter," adds Llamas. "In some cases, a vendor has put more resources to developing its converged mobile device portfolio while its handheld device portfolio has remained largely unchanged. In other cases, a vendor's total shipments for handheld devices have been less than for its personal navigation devices." Looking ahead, IDC expects this downward trend to continue in 2007.

Top Five Handheld Device Vendors

Palm. Palm took top honors in the handheld device market, capturing the clear majority of shipments both for the quarter and the year. However, the company was not immune to a year-on-year shipment decline. Palm has not introduced a new handheld device to its portfolio, relying on its Z22 and TX devices released in Q3 2005. These join their older companions, the Tungsten E2 and the Palm Life Drive.

HP. HP held steady as the number two vendor worldwide both for the quarter and for the year. HP managed to keep its quarterly decline well above the industry average, but its full-year decline was slightly below the industry average. Even though its shipments decreased, it improved its market share nearly five percentage points from a year ago due to market contraction. HP augmented its product portfolio with the addition of its iPAQ rx 5915 Travel Companion, optimized for GPS capability, as well as its iPAQ hx2795 Mobile Media Companion, positioned for multimedia usage.

Mio. Of the leading vendors, Mio was the only company to post both a quarterly and full-year increase in shipments, and just edged past Dell to lay claim to the number three position worldwide during 4Q06. The majority of the company's devices were shipped into Europe and Asia, regions that have been welcoming of its devices in the past. However, Mio's presence in the Americas was still lacking. From a feature perspective, Mio's P550, P350, and A201 models all include a GPS receiver, offering further functionality beyond personal information management and organization.

Dell. Dell finished the fourth quarter just slightly behind Mio, but in terms of full-year shipments, Dell finished the year ahead of Mio. From both a fourth quarter and a full-year perspective, Dell's shipment volumes declined greater than the industry average. Dell has standardized on its Axim X51 series and continues to offer it to both consumer and business customers. In addition to offering its own handheld devices on its website, Dell also offers a lineup of third party devices.

Acer. While there is some clarity on the rankings of the first four vendors, several vendors, including ETEN and Sharp, came close to grabbing the number five spot. This quarter, Acer rounded out the top five, but had the largest year-on-year Q4 decrease of the top five vendors during 4Q06. In addition, Acer did not rank as the number five vendor for 2006. That honor went to Sharp.

Top Five Handheld Device Vendors, Shipments, and Market Share, 4Q 2006 – Preliminary

Vendor Q4 2006 Shipments Q4 2006 Market Share Q4 2005 Shipments Q4 2005 Market Share Year-on-year Growth

Palm 582,000 39.8% 1,019,464 44.7% -42.9%

HP 364,000 24.9% 465,000 20.4% -21.7%

Mio 129,027 8.8% 76,305 3.3% 69.1%

Dell 110,400 7.6% 178,500 7.8% -38.2%

Acer 52,000 3.6% 124,114 5.4% -38.2%

Others 223,467 15.3% 414,856 18.2% -46.1%

TOTAL 1,460,894 100.0% 2,278,239 100.0% -35.9%

Source: IDC Worldwide Handheld QView, February 8, 2007

Top Five Handheld Device Vendors, Shipments, and Market Share, FY 2006- Preliminary

Vendor 2006 Shipments 2006 Market Share 2005 Shipments 2005 Market Share Year-on-year Growth

Palm 1,982,000 36.3% 2,763,139 36.1% -28.3%

HP 1,210,000 22.1% 1,739,365 22.7% -30.4%

Dell 490,000 9.0% 735,929 9.6% -33.4%

Mio 442,893 8.1% 342,664 4.5% 29.2%

Sharp 297,500 5.4% 79,181 1.0% 275.7%

Others 1,044,094 19.1% 1,986,360 26.0% -47.4%

TOTAL 5,466,487 100.0% 7,646,638 100.0% -28.5%

Source: IDC Worldwide Handheld QView, February 8, 2007

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.

To purchase this document, call IDC's sales hotline at 508-988-7988 or email sales@idc.com.

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