News
Issue #2003 - 10 (March 2003)
(Updated Mar. 26, 2003)

MARKET OUTLOOK & TRENDS

Could PDAs Disappear?
Source : In-Stat/MDR Report & Internet News Commentary by Michael Singer

While they aren't in immediate danger of becoming obsolete, personal digital assistants (PDA) are losing the fight for supremacy against smartphones and customer perception, according to a new report. 
Analysts at In-Stat/MDR Tuesday said the PDA market is poised for growth this year, but the outlook for the next four years is not as strong and may get worse depending on world economic conditions.

The Scottsdale, Ariz.,-based market research firm estimates that PDAs will hit a healthy 18.3 percent compound annual growth rate (CAGR) from 2002 to 2007. But the highest growth rate is anticipated only for 2003. Obstacles include weak global economy, continuing erosion of US consumer confidence, and lack of corporate IT spending.

The group says positive numbers in 2003 will likely be due to lower prices, improved operating systems, and a wave of multimedia and wireless functions. Out of the three tiers of products -- low-end, middle-range, and high-end devices -- In-Stat/MDR expects most manufacturers to offer a range of devices in all three categories this year.

"The PDA market is not a mass market," said Cindy Wolf, an analyst with In-Stat/MDR. "In order for it to grow, they [PDA hardware and software vendors] need to innovate.

"They are facing increased competition from the smartphone category, which helps with the consumer's desire to have fewer and fewer devices and more PIM [personal information management] functions. For PDAs to even exist in this category, they are going to have to attract new users. PDAs are not on their way out but will certainly evolve into business tools for corporate access to databases."

The field is mixed; while Sony continues to target multi-media users with its added cameras, video and MP3 playback capabilities, other vendors are taking a separate path.

Handspring, for example, recently decided to drop its Visor line in favor of its Treo products. While the device is considered a PDA-phone, Wolf says more often than not, the phone is just a side app to the e-mail and calendar functions.

The same is true for Palm, which is expected to launch its Tungsten W model in the United States later this week. Wolf says Palm is at least trying to prime the pump with its $99 Zire product. The entry-level system is marketed to first-time users.

In its report, In-Stat/MDR also found that only about 15 percent of all current PDAs offered Internet browsing. This percentage is expected to grow to 75 percent by 2007.

Some of the other things PDA makers are coming up with include continuing a trend toward the Secure Digital standard with memory slots for PDAs. A variety of products are offering on-chip memory, improved power consumption and support for greater functionality.

The report also said that more devices would include 802.11 and Bluetooth, especially high-end models. 
In-Stat/MDR is expected to weigh in on its smartphone forecast next month.

For more information: http://www.instat.com

MobileInfo Comments and Advisory: In-stat analysis seems to be right in suggesting that PDAs will become a niche product for the enterprise and SOHO. Smart phones will outsmart PDAs in the mass market for consumers.  However, it does not mean that PDAs will become dinosaurs - they will assume a specialized role in the handheld device market.

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