bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

urlAlias

moreOnThisArticles

sponsorType

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

Despite stiff competition from Compaq Computer, handheld computer giant Palm expects to continue dominating the world market for personal digital assistants (PDAs), according to a senior Palm official.

Gartner, however, sees a change in leadership happening soon, based on the strong sales of Compaq's Windows CE-based iPAQ handheld system.

Gartner's Dataquest unit projected Palm to lose its revenue leadership position as early as the second quarter, although Palm will still have a strong lead based on units shipped worldwide.

Craig Will, Palm's director for Asia-Pacific operations, disputed the prediction, saying the company's growing Asia-Pacific sales will help maintain its lead.

Gartner projected Palm's hardware revenue to be US$130 million to US$135 million for its financial fourth quarter to June 1.

Handspring recently said revenue for its financial fourth quarter to June 30 would be in the US$60 million to US$65 million range.

Compaq was expected to sell fewer iPAQ handheld PCs in the second quarter, but Compaq had a much higher average selling price than Palm or Handspring, Gartner said. Compaq's PDA revenue would exceed US$200 million by the second quarter to June 30. Mr Will insisted the number-crunching by Gartner did not reflect other factors. 'There have been more than 13 million Palm-branded devices sold since 1996 and about 15 million Palm operating system-based devices, which includes the Handspring Visor and the Sony Clie. Using either number, we've got a huge user base,' Mr Will said.

Gartner took a short-term view of the market. Mr Will said the iPAQ numbers were based on Compaq retail prices in the market, compared with the figures from Palm that reflected the average selling price given to distributors. 'They [the figures] also did not take into account that the Palm inventory with dealers is already headed for enterprises and other users,' he said.

Mr Will said Palm in 1999 had more than 50 per cent market share in Asia and that figures to be released by International Data Corp this week would show sales had tripled from 1999 to last year, and that growth was expected to continue for the Palm platform.

Analysts at Gartner were not convinced. Todd Kort, principal analyst of Gartner Dataquest's computing platform worldwide group, said: 'A growing portion of new users and users who are upgrading want better messaging capabilities, such as access to corporate e-mail, short message services, wireless LAN [local area network] or integration of a PDA with a mobile phone. This is especially true of corporate users.

'As better wireless messaging capabilities have become available, many enterprises are considering large volume purchases of PDAs. Palm has little to offer such companies. Palm is well behind the competition in implementing each of these wireless technologies, and this lack of innovation is a big contributor to its declining fortunes.'

Gartner analysts said there had been little improved functionality of the Palm OS software since splitting from 3Com in the second quarter of last year, and this had enabled Microsoft to catch up with Windows CE 3.0.

With Microsoft's next version of Windows CE, code named Talisker, looming at the end of this year, Microsoft may have the necessary ingredients to make a much stronger play for the corporate market, Gartner analysts said.

Ken Dulaney, vice-president and research director for Gartner's mobile business strategies programme, said: 'Compaq and Sony are gaining ground in the high-end of the consumer market. Meanwhile, the corporate market is slowly swinging towards devices running Microsoft's Windows CE operating system, because of its smoother functioning with Outlook and Office applications.'

'Palm remains a solid choice for enterprise use. However, users should not commit to any vendor beyond two years, at which time they should evaluate Palm devices against competing products.'

For Palm to achieve the level of profitability it enjoyed in the past, Gartner analysts said it must make some changes.

It must offer a machine with a new operating system, which was expected by the fourth quarter of next year, and it must offer a Palm VIIx replacement, which was scheduled for the second half of this year.

Gartner analysts also warned those changes alone would not be enough.

Mr Dulaney said: 'Palm needs to offer a credible high-end device with features that compare to those offered by Compaq's iPAQ. The company should be restructured to at least split hardware and software.

'Both Microsoft and Symbian are software-only ventures with software growth expectations. Palm is a software company with hardware growth expectations. A split company would permit stockholders to benefit from each entity acting in its own best interests.'

Palm recently said it expected revenue for the fourth quarter of this financial year to range between US$140 million and US$160 million, compared with its previous fourth quarter revenue outlook of US$300 million to US$315 million.

The company reported revenues of US$350 million in the fourth quarter of financial 2000 and US$471 million in the third quarter of this financial year.



Rival Compaq will gain on higher iPAQ prices