Worldwide Internet Screenphone Market To Reach 9.5 Million Units By 2002, IDC Study Finds

FRAMINGHAM, Mass, May 4, 1998 — The global Internet screenphone market will reach 9.5 million units by 2002, representing $2.2 billion in market revenues, according to a recently completed report by International Data Corporation

(IDC). The enormous growth of this market has already exceeded initial expectations, surpassing one million units in 1997, the study found.

"While the expansion of this market has been explosive, we believe the path to future growth is paved with many challenges that have thus far been troublesome for most screenphone vendors," said Sean Kaldor, vice president of IDC's

Consumer Devices research. "Although Northern Telecom has excelled to become the market leader with its PowerTouch product line, and CIDCO's new iPhone is shipping in reasonable seeding volumes, most early vendors are either in deep

financial trouble or withdrawing from the market."

IDC splits the Internet screenphone market into four product categories: low end; midrange; high end; and videophone devices. Although the most exciting and technologically stunning products have been coming out in the high-end category, IDC forecasts the majority of the volume opportunity to exist in the low-end and midrange spaces.

"CIDCO/InfoGear, Alcatel, Philips, and Nortel have exciting new products or great product concepts," said Kaldor. "But the lower price points and targeted functionality of products similar to Casio PhoneMate's IT-380 or CIDCO's CST-2100 will likely be able to achieve higher product volumes in the near term. In the longer term, as prices drop, our surveys indicate the screenphone is an excellent form factor for consumer communication activities."

Vendors are aware building the market will likely be a long, hard battle. This study indicates the successful vendors are staying focused on partnering with service providers and powerful value-added services to generate interest in the

devices themselves. "Ultimately, for the Internet screenphone market to flourish, these devices must also be top-quality telephones at affordable prices. CIDCO and Nortel both understand this, which is why their products currently are number one and number two globally," said Kaldor.

Many vendors today are pushing to win the core technology battle for Internet screenphones, especially from the semiconductor and the operating system perspectives. After extensive interviews with vendors and a review of consumer

needs, IDC forecasts a highly segmented market for screenphone technology suppliers.

"Sun Microsystems' Java family definitely has the edge over Microsoft's Windows CE family based upon current vendor plans," said Kaldor. "But in the big picture, no single O/S supplier has a sizable share of the market. It's an open battle that will likely continue to fragment for years to come," said Kaldor.

IDC's report, Review and Forecast of the Worldwide Internet Screenphone Marketplace, 1997?2002, (IDC #B15860) is a detailed analysis of the products, vendors, technologies, strategies, and customers surrounding the screenphone

opportunity in the United States and globally. "IDC has been at the forefront, analyzing this new market. This study represents the most detailed analysis currently available in the marketplace," said Kaldor.

It is available for purchase by contacting Cheryl Toffel at 508-935-4389 or at ctoffel@idc.com. For additional information about IDC's Consumer Devices program, contact Beth Freedman at 508-935-4764 or at bfreedman@idc.com.

About IDC

Headquartered in Framingham, Mass., International Data Corporation provides IT market research and consulting to more than 3,900 high-technology customers around the world. With a global network of 375 analysts in more than 40

countries, IDC is the industry's most comprehensive resource on worldwide IT markets, products, vendors, and geographies.

IDC/LINK, an IDC subsidiary, researches and analyzes the home computing market, leading-edge technologies in telecommunications and new media, and the convergence of computing and consumer electronics.

IDC's World Wide Web site (http://www.idc.com) contains additional company information and recent news releases, and it offers full-text searching of recent research.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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