Worldwide Handheld Market Experiences Tenth Quarter of Year-Over-Year Decline

IDC: The second quarter of 2006 saw the worldwide handheld devices market experience its tenth consecutive quarter of year-over-year decline. 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. 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.

• 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	341,250	25.1%	338,874	18.4%	0.7%
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.

Worldwide Handheld QView Publ 20060804