Worldwide Handheld Device Shipments Decline 12% from Previous Year in First Quarter 2004, According to IDC

Business Wire, April 27, 2004

Business Editors/High-Tech Writers

FRAMINGHAM, Mass.--(BUSINESS WIRE)--April 27, 2004

The worldwide market for handheld devices declined in the first quarter of 2004 due to seasonally sluggish demand and vendor re-focusing. According to IDC's Worldwide Handheld QView, device shipments decreased 11.7% year-on-year in 1Q04 and dropped sequentially 33.1% to 2.2 million units.

While vendor commitment to entry-level devices at lower price points has helped to grow the handheld user base, many would-be handheld purchasers obtained their devices during the holiday shopping season in the fourth quarter of last year. As a result, despite growth in the European market, the seasonal slump hit vendors particularly hard during the first quarter of this year. The market was also strongly impacted by a number of vendors focusing on trimming down their product offerings and clearing their channels in preparation for spring product launches.

"Despite increasingly powerful handheld devices reaching market, the consumer uptake of entry-level devices available from nearly every vendor calls into question the upgrade path and value posed by the high-end devices. If entry-level devices prove to be the most successful products adopted by consumers, the long-term impact could be acceleration away from hardware differentiation and a further loss of value in the handheld industry," said David Linsalata, analyst in IDC's Mobile Devices program. "Handheld device vendors must continue to search for consumer and enterprise solutions for their products, such as GPS device bundles, that utilize the range of capabilities contained in a handheld device."

Vendor Highlights

-- palmOne - Hit particularly hard by the seasonality of the

handheld market, palmOne posted a sequential decline of 38.7%

and a corresponding decrease in market share from 39.4% to

36.1%. However, palmOne will announce two Zire handhelds this

quarter and, given the fact that the Zire family has surpassed

3 million units in fewer than 18 months, palmOne's shipments

are expected to increase in the near future.

-- Hewlett Packard - Despite the declining handheld market and a

32.9% sequential drop, HP posted the strongest year-over-year

increase among the top 5 vendors with a rise of 24.8%. This

increase, based on the strength of an array of devices hitting

the entire spectrum of price points, enabled HP to maintain

its market share position of 25.7%.

-- Sony - Caught in the middle of a strategy shift to a

streamlined set of products and a focus on improved PIM and

other core handheld applications, Sony's market share dropped

to single digits on a sequential drop of 57.2% and

year-over-year drop of 49.6%.

-- Dell - Riding the benefit of a fiscal year-end sales push in

January as well as Dell's direct sales model, Dell experienced

a 1.1% sequential decline in shipments, the lowest drop among

the top 5 vendors. Seasonality did take its toll, however, as

the company only increased 2.2% year-over-year, bringing its

market share up 4.7% to 7%.

-- Toshiba - Despite a relatively lackluster first quarter with a

year-over-year shipment decrease of 34.1% and a sequential

decrease of 48.4%, Toshiba reentered the top 5 vendor list

this quarter. Toshiba, a constant member of the top 5 vendors

since Q302, was knocked out of the top 5 vendor list last

quarter by newcomer Medion's strong sales. Medion did not,

however, repeat last quarter's performance.

Top 5 Vendors, Worldwide Handheld Device Shipments and Market
Share, 1Q 2004 (Preliminary)

 Rank            Vendor           1Q 2004 Shipments   1Q 2004 Market
                                                           Share
----------------------------------------------------------------------
  1    palmOne                         810,183             36.1%
----------------------------------------------------------------------
  2    Hewlett-Packard                 577,615             25.7%
----------------------------------------------------------------------
  3    Sony                            209,675             9.3%
----------------------------------------------------------------------
  4    Dell                            157,399             7.0%
----------------------------------------------------------------------
  5    Toshiba                         49,067              2.2%
----------------------------------------------------------------------
       Other                           442,560             19.7%
----------------------------------------------------------------------
       Total                          2,246,499           100.0%
----------------------------------------------------------------------

-- 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