Palm Dominates 2001 PDA Sales, But Compaq Gains

Dataquest on Wednesday said Palm's slice of the global market for PDAs fell, to 38.6 percent in 2001 from 50.4 percent in 2000.

In all, Palm shipped 5.1 million units, more than three times that of its nearest competitor. But 2001 shipments were off from 5.6 million in 2000.

"It was a difficult year for Palm," says Gartner Dataquest analyst Todd Kort. "But considering that they owned the market for several years and that serious competition has finally arrived, it is not a surprise that they would be losing some ten points in market share from one year to the next."

Palm has ruled the handheld held market since 1988, when, as a unit of former parent 3Com, it sold more than 1 million of its early PDAs. Since then a growing list of rivals, ranging from Japan's Sony to Finland's Nokia , have either entered the handheld market or added organizer features to existing devices.

Accordingly, as Palm shares have slipped, its closest rivals have seen shipments rise. Shipments by No. 2 handheld maker Handspring rose in 2000, to 1.6 million from 1.4 million, Dataquest says. Its market share edged up to 12.6 percent from 12.4 percent.

Shipments by Compaq rose 178 percent, to 1.3 million in 2001 from 466,000 in 2000. Its market share more than doubled, to 9.8 percent from 4.2 percent.

Hewlett-Packard's market share gained 1.4 percentage points to 5.4 percent, as shipments reached 711,000 from 442,000, Dataquest says.

Total PDA Shipment Growth Slows

Overall global shipments of handheld computers in 2001 totaled 13.1 million units, an 18 percent increase from 2000, according to Dataquest, but a far cry from the 114 percent leap in shipments recorded in 2000 from 1999 levels.

Palm OS, Palm's operating system that powers PDAs by makers such as Palm and Handspring, captured about 57 percent of the worldwide PDA market in 2001. Vendors of Microsoft's system software for pocket computers, controlled some 21 percent of the market, up from about 11 percent in 2000, Dataquest said.

The handheld computer market went through a topsy-turvy year in 2001, as early robust demand was deflated by the economic slowdown, and competition and bloated inventories drove Palm and Handspring into a price war.

But buyers returned late in the year as Palm and Handspring scored with strategies to sell loads of older models and piqued consumers interest in discounted newer devices.

"Strong holiday season purchases were a big contributor to the sales upturn," Dataquest's Kort says. "Palm and Handspring's average selling price fell to $165 as their price cuts continued and older inventory was pushed through the retail channel at low prices."

Dataquest says the global average selling price last year for PDAs slipped, to $277 from $296 in 2000. Prices were pulled down by cheaper Palm and Handspring devices, which sold on average at about $200, and proprietary models developed in China which sold for $100 or less.

But that downward pull was countered by gains at Compaq and Hewlett-Packard, whose handhelds typically cost more than $400 each.

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