LONDON, July 23, 2002 - Despite an eventful quarter marked by an influx of new wireless devices into the market, as well as the combined shipments of the new HP that positioned the vendor in first place in Europe, the market failed to show any signs of improvement over the first quarter of the year. Shipments of 449,740 showed a decline of 21% on the corresponding quarter in the previous year in Western Europe, according to preliminary data from IDC.
Converged wireless devices such as the Handspring Treo 270, O2 XDA, and the Nokia 7650 Bluetooth-integrated device recorded very positive results upon introduction towards the end of the second quarter. However, this was not enough to prevent a year on year quarterly decline for both Handspring and Nokia.
"The handheld device market continues to be beset by similar problems that are also affecting the market for mobile handset terminals, such as the need for compelling reasons to upgrade, the cost of integrating new devices into organizations, as well as justification of the "benefits of ownership," commented Andy Brown, Research Manager for Mobile Computing at IDC. "Whilst the introduction of new wireless devices such as the Nokia 7650, O2 XDA, and Handspring Treo 270 offers interesting new form factors and capabilities, it remains to be seen as to whether new technology alone is reason enough for end users to upgrade," he added.
Other pocket PC phone edition devices due out on the market soon include the HP Jornada 928 and an HTC built device, which will be similar to the XDA, due to be released by T-Mobile; both products are expected to ship in 3Q02. Other new devices such as the Sony Ericsson P800 should help bolster the converged device market in coming quarters.
End user demand for stand-alone handheld products displayed a weaker dynamic than the first quarter. Low consumer confidence and the World Cup assisted in diverting attention away from handheld purchases. Whilst many enterprises continued to consider and evaluate handheld devices, a perpetuation of the cautious and uncertain economic environment prevented wider implementation and integration within organizations.
Vendor Highlights
HP (including Compaq) managed to resolve the complex issue of product integration relatively efficiently, with aggressive targeting of European markets across all product lines driving sales. A stronger period of sales into the distribution channel in 1Q02 of high-end Bluetooth-integrated iPaq 3800 and 3900 devices prevented stronger growth in 2Q02. The combined sales with the existing HP Journada products assisted the vendor in gaining a comfortable lead over Palm. However, the vendor missed the low-end price points, preventing the vendor from generating higher volumes.
Palm recorded a decline of 14% year on year but managed to maintain a relatively high-end product mix, which assisted revenues. Demand for the new colour products introduced in March 2002 accounted for over 60% of Palm sales over the 2Q02 period. Enterprise business represented an area of improvement for Palm in the UK, although the vendor's share is experiencing considerable erosion.
Nokia continued to drive down prices on its 9210 Communicator product in order to stimulate sales. Towards the end of the quarter, the vendor was boosted by healthy initial sales of its Symbian-based 7650 device, with a number of devices imported to Europe to satiate strong initial demand.
Handspring recovered towards the end of 2Q02 due to the strong entry of the Treo 270 wireless converged device. Handspring continued GPRS testing for new and existing products, and recorded success through the phone retail and carrier retail stores in Switzerland and France.
Sony moved into the Top 5 for the first time, with heavy advertising on its consumer products in Europe. The vendor focused on integrating hardware and software and interoperability with other Sony devices. Combined retail promotions with Vaio notebooks and other Sony consumer devices, as well as the introduction of new products such as the NR70V, also helped drive sales.
mmO2 also released the xda from UK based mobile operator mmO2 during 2Q02. Early sales of the operator's xda converged wireless device were very well received through the operators own retail outlets, as well as through other mobile phone retailers. The pocket PC phone edition device was launched in the Netherlands in May, the UK in mid-June, and Germany towards the end of June. To date, sales stand at just over 4,000 units, with shipments into channel of approximately 12,000 units; this is lower than IDC had previously expected, considering the amount of advertising and industry attention the device has received. Comments from mmO2 remain positive, stating that so far sales match expectations and that they expect a ramp of sales month on month as education and awareness in the target market increases.
Top 5 Smart Handheld Device (including Converged Wireless Device) Vendors,
Western Europe,
2Q02 (Preliminary) (Unit '000s)
|----------------+---------+-----------+-----------+----------->
| | | | | |
| | 2Q02 | 2Q01 | Share | Share |
| | | | 2Q02 | 2Q02 |
| | | | | |
|----------------+---------+-----------+-----------+----------->
>----------------------------------------|
| |
| Y/Y Growth |
| |
>----------------------------------------|
|----------------+---------+-----------+-----------+----------->
| | | | | |
| HP* | 146 | 179 | 32% | 32% |
| | | | | |
|----------------+---------+-----------+-----------+----------->
>----------------------------------------|
| |
| -18% |
| |
>----------------------------------------|
|----------------+---------+-----------+-----------+----------->
| | | | | |
| Palm | 135 | 157 | 30% | 28% |
| | | | | |
|----------------+---------+-----------+-----------+----------->
>----------------------------------------|
| |
| -14% |
| |
>----------------------------------------|
|----------------+---------+-----------+-----------+----------->
| | | | | |
| Nokia | 33 | 67 | 7% | 12% |
| | | | | |
|----------------+---------+-----------+-----------+----------->
>----------------------------------------|
| |
| -51% |
| |
>----------------------------------------|
|----------------+---------+-----------+-----------+----------->
| | | | | |
| Handspring | 32 | 37 | 7% | 7% |
| | | | | |
|----------------+---------+-----------+-----------+----------->
>----------------------------------------|
| |
| -14% |
| |
>----------------------------------------|
|----------------+---------+-----------+-----------+----------->
| | | | | |
| Sony | 28 | 10 | 6% | 2% |
| | | | | |
|----------------+---------+-----------+-----------+----------->
>----------------------------------------|
| |
| 180% |
| |
>----------------------------------------|
|----------------+---------+-----------+-----------+----------->
| | | | | |
| Others | 78 | 119 | 17% | 21% |
| | | | | |
|----------------+---------+-----------+-----------+----------->
>----------------------------------------|
| |
| -34% |
| |
>----------------------------------------|
|----------------+---------+-----------+-----------+----------->
| | | | | |
| Total Western | 450 | 568 | 100% | 100% |
| Europe | | | | |
| | | | | |
|----------------+---------+-----------+-----------+----------->
>----------------------------------------|
| |
| -21% |
| |
>----------------------------------------|
Shipments are branded shipments and exclude OEM sales for all vendors
Data for all vendors is reported for calendar periods
* Data for HP includes HP and Compaq combined
Source: IDC EMEA, Preliminary Results 2Q02
About IDC
IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies and the financial community. Additional information can be found at www.idc.com IDC is a division of IDG, the world's leading IT media, research and exposition company. # # # All product and company names may be trademarks or registered trademarks of their respective holders.
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