Worldwide Handheld Market Experiences Tenth Quarter of Year-Over-Year Decline, According to IDC

FRAMINGHAM, MA – AUGUST 3, 2006 – The second quarter of 2006 saw the worldwide handheld devices market experience its tenth consecutive quarter of year-over-year decline. According to IDC's Worldwide Handheld QView, vendors shipped a total of 1.4 million devices, a 26.3% decrease from the same quarter one year ago. For the first half of the year, vendors shipped a total of 2.9 million units, down 21.4% from the 3.7 million units shipped during the first half of 2005.

"The past ten quarters have provided a combination of factors that have led to this milestone: the exit of vendors from the handheld market, the shift of vendor focus from handheld devices to converged mobile devices (i.e. smartphones), and the increasing popularity of converged mobile devices overall," said Ramon Llamas, research analyst with IDC's Mobile Markets Team. "Looking ahead, we expect additional quarters of decline and a flattening out of shipment activity before a return to growth. In order to do that, vendors must discover more market segments, relevant applications, and improved usability beyond personal information management. The inclusion of Bluetooth, Wi-Fi, and GPS have kept handheld devices relevant, particularly for core users. However, more applications must be deployed to reach more users and eventually bring about a stabilizing effect to shipment activity."

Vendor Highlights

— Palm, Inc. Despite posting a year-over-year decline, Palm remained far and away the worldwide market leader of handheld devices with shipments totaling more than the next two vendors combined. In addition to being the leader of handheld devices, Palm has also developed its converged mobile devices, with shipments surpassing its handheld devices.

— HP. HP remained the clear number 2 vendor of handheld devices worldwide, with double the shipment volume of the number 3 vendor, Dell. Like Palm, HP has been developing its own line of converged mobile devices, but during Q2 HP's handheld devices still outpaced its converged mobile devices.

— Dell. Holding steady in the number 3 position was U.S.-based Dell. Over the course of the quarter, Dell continued to tout the Axim X51, having phased out its Axim X30 and X50 products from a year ago. Unlike Palm and HP, Dell has not released a converged mobile device to the market.

— Mio. Despite posting a year-over-year decrease this quarter, Taiwanese vendor Mio was able to post the smallest year-over-year decrease of the top five vendors, and supplanted Acer for the number 4 position worldwide after trailing by just a thousand units last quarter in the process.

— Acer. Of the top five vendors, Acer suffered the largest year-over-year decline, but still managed to remain ahead of other vendors to lay claim to the number 5 position worldwide. Acer's position as the number 5 vendor worldwide is hardly assured, with a number of vendors trailing closely behind.

Top 5 Vendors, Worldwide Handheld Device Shipments and Market Share,

2Q 2006 (Preliminary)

Vendor 2Q06 Shipments 2Q06 Market Share 2Q05 Shipments 2Q05 Market Share 2Q06/2Q05 Growth

1. Palm 475,000 34.9% 638,376 34.6% -25.6%

2. HP 260,000 19.1% 380,000 20.6% -31.6%

3. Dell 132,050 9.7% 179,200 9.7% -26.3%

4. Mio 91,700 6.7% 110,660 6.0% -17.1%

5. Acer 60,000 4.4% 199,351 10.8% -69.9%

Others 401,250 29.5% 538,225 29.1% -25.4%

Total 1,360,000 100.0% 1,846,461 100.0% -26.3%

Source: IDC Worldwide Handheld QView, August 3, 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 www.idc.com .

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

###