Worldwide Smart Handheld Device Forecast Bolstered by Personal Companion Dominance, According to IDC

FRAMINGHAM, Mass., December 22, 1999 — Handheld companions continue to be a driving force in the worldwide smart handheld device (SHD) market. According to new research from International Data Corporation (IDC), personal companions remain the "golden child" of this market, making up 65% of the entire handheld companion segment. Overall, IDC expects handheld companions will grow 22.5% to 5.4 million units worldwide in 1999 and to 18.9 million units by 2003.

In the first half of 1999, 3Com's Palm devices dominated the handheld companion market with shipments of nearly 1.2 million units. This success will continue through the holiday season despite the emergence of a few able competitors. The outlook for Windows CE products is far less optimistic, with several of the players abandoning the PC companion and personal companion market in 1999. In 2000, IDC expects an influx of new products, players, and designs in the handheld companion segment, causing the market landscape to evolve further.

The smart phone market took a serious hit in 1999, shipping only 774,000 units worldwide, a 39.3% decrease over previous forecasts. "There are a number of buzzwords, such as WAP, Bluetooth, and 3G, swirling around this market," said Diana Hwang, manager with IDC's Mobile Computing research program. "Devices using these technologies, however, are scarce and must be more widely implemented to live up to the hype." Despite this rocky stretch, all is not lost, and this market remains extraordinarily active as major handset players partner with operating system providers and carriers. IDC expects smart phone vendors to ship 12.9 million units worldwide by 2003 as new designs and network services drive growth. Overall, the worldwide smart phone market will emerge as a major volume opportunity on a global basis.

Vertical application devices (VADs) are on a steady course. The worldwide VAD market will hit 2 million units in 1999 and stretch to 3.7 million by 2003. "Market growth can be attributed to a number of different issues; automation continues to represent a booming business," said Jill House, a research analyst at IDC. "Mobile work forces and the need for replacing paper-based systems are becoming more and more a priority."

Key Findings

Key findings from IDC's research include the following:

— Palm reported 1H99 market share of 68.4% in the United States and 47.2% worldwide for the handheld companion segment.

— The first color personal companion hit the scene in 1999.

— Philips Mobile Computing Group, L.G. Electronics, and Everex abandoned the Windows CE ship.

— The lack of smart phone volume until 2000 and beyond slows initial growth of the market.

— The possible emergence of Java as a language to bridge personal companion and smart phone gap looms.

·– Pen notepads see strong deployment opportunities based on ease of use, small form factor, and low price points.

— Keypad handhelds remain entrenched and best serve an ergonomic and data collection function.

IDC's report, Pocket Full of Palms: The Smart Handheld Devices Market Forecast Update and Outlook, 1999-2003, is available for purchase by contacting Patrick Steeves at 508-988-6787, or at psteeves@idc.com.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 42 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

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

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