IDC: PDA Shipments Drop 43 Percent in Q2

Sales of PDAs continued a steep decline in the second quarter, as struggling vendors shipped 719,000 units worldwide, down from 1.26 million last year, according to a market research report released Wednesday.

The results mark a 43.5 percent decline, a drop so large that Dell Inc. recently decided to stop selling its Axim handset and leave the market segment to its competitors, according to IDC.

And with no sign of better sales on the horizon, remaining vendors like Palm Inc. face mounting pressure to justify remaining in the market, said IDC analyst Ramon Llamas.

Palm is the largest PDA vendor with a 44.1 percent market share, followed by Hewlett-Packard Co. (HP) with 23.5 percent, Mio Technology Ltd. with 13.6 percent and Fujitsu-Siemens Computers GmbH with 3.0 percent. Dell was in fourth place with a share of 3.3 percent, but IDC said that number would quickly drop to zero as the last remaining units are sold.

IDC defines PDAs as handheld devices that do not have telephone capability (though they may have wireless data links like Bluetooth or Wi-Fi), and use advanced operating systems such as Microsoft Corp.'s Windows Mobile, Access Co. Ltd.'s Garnet Palm OS or Linux.

Dell confirmed that plunging demand was the reason it abandoned the Axim line after spending four years in the handset market, according to a message on a company blog posted in April by Lionel Menchaca, the company's digital media manager.

Dell will continue to provide peripheral items and technical and warranty support for its remaining customers. The company still sells Windows-based PDAs from other manufacturers on its online store, including products from Socket Mobile Inc., AsusTek Computer Inc. and Pharos Science & Applications Inc.

Palm is struggling with the same conditions, as the company is in the process of a long-term plan to generate revenue from higher priced smartphones instead of PDAs. The company hasn't launched a new PDA model in two years, and relied on existing products like the Z22 and the TX to create its second quarter revenue in that segment.

Palm faces additional pressure from investors; rumors circulated in the first quarter that the company might be an acquisition target. However, Palm raised $325 million in June by selling a 25 percent stake of the company to private equity investors.

As Dell and Palm withdraw from the market, remaining handset vendors are competing for the shrinking pool of customers by adding new features like global positioning system (GPS) service, multimedia players and wireless connectivity, Llamas said.

HP took that path with the latest versions of its iPaq, and Mio includes GPS receivers in three of its most popular devices, the P550, P350 and A201, he said.

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