Handheld Computer
Industry Analysis
Dan Huff
Kim Hebb
Kelly James
Margaret McKinnon
Background
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Handheld Computers (PDAs) first
introduced by Apple in 1993, marketed as
the Newton Message Pad.
Evolved from handheld electronic
organizers such as the Psion (1984)
First PDA’s relied on handwriting
recognition programs and had calendars,
address books and to-do lists.
Now…
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Wireless/voice capabilities
Digital camers
MP3 players
Product
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The PDA market can be divided
into two segments.
Consumer – low cost, user friendly
devices equipped for basic
information storage and retrieval,
i.e. address books and calendars.
 Business – higher cost devices
focused on business applications
such as wireless email and word
processing.

Source: Xilinx.com
Demographics
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Who are PDA users?
Age 21-30: 28%
 Age 31-40: 31%
 Tend to have higher levels of
education than average
 93% have Internet access at
home, vs. 58% of the general
population.
 Men are nearly twice as likely to
have a PDA than women.

Sources: Lexis-Nexis and Cyber Atlas
US Consumers most Popular
Technology Devices
1.
2.
3.
4.
5.
6.
7.
8.
Desktop PC
Mobile Phone
Nintendo® gaming system
Sony® PlayStation or PlayStation II
Laptop PC
Pager
PDA
Sega® Dreamcast
Source: Jupiter Media Matrix
Popular Features
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Calendar / Address Book
Wireless email
Business Applications
Word Processing
 Spreadsheet
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Wireless Internet

Location-based services (i.e.
traffic, weather, driving directions)
Consumer Purchasing
Behavior
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53% of users purchased their
PDA for themselves.
27% received their PDA as a
gift.
20% received their PDA from
their employer.
Source: CyberAtlas
Channels of Distribution

Two Major
Channels
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Traditional
Retail Store
E-Commerce
Store
Source: NPD Intelect
Category ASP and Category Share, in
units and dollars
Traditional Store
ASP
$271.00
Channel Share:
Traditional
E-Commerce
ASP
$293.00
E-Commerce
88.2% unit
share
11.8% unit
share
85.6% dollar
share
14.4% dollar
share
Market Sales and Growth
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About 6.1 mil personal digital
assistants were shipped to retailers
in 2000, up 50% vs previous year;
sales may reach 9.6 mil units in 2001
61.5 million people will be using
wireless devices to access the
Internet in 2003, up from 7 .4 million
in the US today, according to a new
report from IDC Research. The
growth represents a 728 percent
increase.
Source: IDC Research
Other Market Growth Predictions

Leading computer research firm
estimates that annual sales in
the handheld market will more
than triple from 5.4 million units
worldwide in 1999 to 18.9 million
units in 2003.
www.cesinc.com/company/factsheet.html
Other Market Data

The U.S. market for handheld
computers doubled to more than $1
billion. Revenues from selling
personal digital assistants, such as
Palm organizers and Pocket PCs,
totaled $1.03 billion in 2000, more
than twice the $436.5 million sold in
1999. In terms of per unit sales,
manufacturers sold 3.5 million
devices in 2000, over two-and-a-half
times the 1999 figure of 1.3 million.
NPD Intellect
Seasonal Data

Sales are strong for the
handheld industry for the week
ending 23 November in a
Holiday Season that is seen
critical for handheld
manufacturers following a drop
in demand for handheld in a
year affected by the slowing
down of the global economy and
the US entering a recession.
IDC Research
Market Share
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The handheld
computer industry has
a number of
competitors.
Market dominated by
Palm. The Palm V is
the most popular PDA.
There are constant
new entrants to the
market.
Source: CyberAtlas
Market Share
Palm
29.70%
Handspring
13.90%
Compaq
7.30%
Casio
5.60%
HewlettPackard
5.30%
Minren
5.10%
Others
33.00%
International Markets
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Despite tighter inventory controls and
aggressive pricing, the European market
for handheld devices (including PDAs and
Smartphones) declined 30.2% in the final
quarter of 2001. This result was artificially
low, however, due to high levels of
shipments into the distribution channel in
the same period of 2000, and full year
results showed a growth of 8%.
Little Asian market information – optimistic
view for general wireless market
Sources: www.allnetdevices.com and IDC
State of Market
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
Palm is holding on to #1 position
despite intense competition from
Handspring and Microsoft
Strategic alliances with wireless
phone companies like Sprint
PCS are allowing faster
introduction of PDA’s with phone
capabilities
State of Market

Major price declines and
consolidation in ’02 because…
More than 20 vendors vying for
market share
 Little to no differentiation
 Weak economy
 Lack of mature applications

Source: Hardware Platform Market Predictions for 2002;
Leslie Fiering; Gartner; 17 December 2001
State of Market
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Competition increasing as many
successful computer hardware
manufacturers facing low
margins are entering the market
Toshiba
 Compaq

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Business market segment
gaining more attention
Size
 Revenue growth

State of Market
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New applications (instant
messaging) are helping to drive
market
Source: Wireless LAN: The Next Killer Application; 17 May
2001; Mostafa Maarouf; Gartner, Inc.
Average Retail Price (by
Brand)
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Palm-$99-$399
Handspring-Treo $399-$599;
Visor $250
Compaq-iPAQ$399-$599
Sony-Clie $199-$449
Casio-Cassiopeia $599
H-P-Jordana $449-$899
Sources: Company websites
Seasonal Pricing Trends
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The average price of a handheld
sold in US retail stores during
the holidays was $218
compared with about $260 a
year ago.
Source: The Gartner Group
Major Competitors
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Palm-Leading manufacturer of handheld microcomputers; developer of related
personal information management, operating systems, API, web-clipping and
handwriting recognition. The handwriting recognition software recognizes handwriting
and transcribes the written text into typed text. Also sell accessories, etc on website.
Market leader, with most popular PDA, the Palm V.
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Handspring-The Idea: To fundamentally change the way people organize,
manage and communicate. Executive team that launched the Palm Pilot. The
PalmPilot™ sold faster than the VCR, the color TV, the cell phone, even the personal
computer. Now, moving from making traditional PDA’s to only making wireless-enabled
handheld computing devices. Developing partnerships with platform vendors to market
Treo (new wireless device) in its enterprise space. First PDA player to introduce
handheld computing device with voice capabilities, in the Treo.
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Compaq-Designs, manufactures, and markets commercial desktop, portable

Casio-Manufacturer of the CASSIOPEIA pocket PC.
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H-P-Products include desktops and workstations, handheld computers, mobile
products, and consumer pc’s (among many other related products). Customers range
from business interests, home users, and govt and educational users. Handheld
product is iPAC. The Microsoft® Windows® Powered iPAQ Pocket PC puts the power
of a desktop PC in a sleek little to-go box that gives you access to Microsoft Pocket
applications like Internet Explorer, Outlook, Word and Excel. Consumer price $399 to
$599.
Newest model is E-200, which
operates using Microsoft© Windows-Powered Pocket PC 2002 software, allows users
to connect to a variety of wireless network products and accessories to create a
complete mobile office environment. The E-200 includes many new features designed
to improve performance, ease ofuse and optional wireless connectivity for demanding
Mobile Professionals, Corporate and Government Markets. Retail Price $599.00
products, printing and digital,storage, servers, networks, and software. The Jordana,
“simplicity in the palm of your hand”, handheld and pocket pc, retail from $449 to $899.
Newer Entrants
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Acer-Thai Computer company, launched first PDA in Thailand earlier this month.
Positioned as affordable alternative Palm. Uses Palm OS 4.1 and boasts largest
internal memeory capacity of any PDA with 16 megabytes. Targets 24-35 yrs, middle
income, young exec’s and tech-savvy.
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Sony-Holding company with subsidiaries which (among other things) develop,
manufacture and sell electronic equipment, now including handheld computers, called
Clie. Use Palm O/S and feature many upgrades. Retail from 199 to 449. Called
personal entertainment organizer.
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Sharp-Entertainment, applicances, business, mobile. Most well known for home
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Toshiba-Products include portables, DVD, telephones, storage, medical imaging,
electronics, like TV’s. New product, Zaurus, is expected to launch early this year. “The
Sharp Zaurus combines state-of-the-art Sharp technology and Sharp innovation to
deliver a unique and compelling PDA solution.” Will be relatively high priced, between
$500-600.
and digital cameras. New product, Genio. Current product, pocket pc e570.
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Hitachi-Families of products include,consumer, electronic, industrial, power,
information systems, and materials. Will enter market later this year with product based
on Windows CE. Net. Will first be commericalized in Japan for corporate users.
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Royal Consumer Information Products- A division of Olivetti Office
USA. Unveilded the Royal Linux PDA at the this year’s CES show. Is expected to hit
streets next quarter. Based on same Intel processor as Compaq iPAQ and HP
Jordana. Price $299. Currently manufacture daVinci and Vista models.
Competitor Business
Strategies
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Toshiba
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Direct selling to
business customers
Understands the
importance of
wireless technology
Understands
limitations of their
own operating
system
Making the right
partnerships
Competing head-on
with Compaq and is
expected to
overtake iPAQ
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Palm
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New focus on
business customers
Strong operating
system
Strong software
customers
Strategic alliances
with several
handheld
manufacturers
New plans for OS to
compete against
Microsoft’s
Windows CE and
Pocket PC
Competitor Business
Strategies

Handspring

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Focus on business
customers
Plans to offer
choice of Palm’s
OS and Microsoft’s
Pocket PC
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Hitachi
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New focus on
business customers
Leveraging
stronghold in Japan
before releasing in
US
Competitor Ratio Analysis
(PDA Industry Only)
Ratios
Palm
H-spring
Current
1.634
1.451
Quick
1.137
0.93
Total Debt/Equity
76.7
74.4
14.463
129.837
Return on Assets
-27.5
-49.7
Return on Sales
-22.9
-34
Return on Net Worth
-48.6
-86.8
Net Sales/Inventory
Source: Standard & Poor's
Current News, etc…
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Technological Breakthroughs
Instant messaging is better
alternative to e-mail for most
consumers
 Microsoft Windows CE.net is
creating next generation of
programmable, intelligent
handhelds
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Can be connected to internet,
integrate with PCs and backend
servers
Current News, etc…
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Technological Breakthroughs
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Toshiba’s MPEG4
Stream movie trailers
 Traffic and weather reports
 Short video clips
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Source: SiliconValley.com; Dawn C. Chielewski;
Future Outlook…
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Good enterprise applications,
and strong solution partners are
key to survival
Growing speculation of Palm
and Handspring merger in 2002
Decrease cutthroat competition
 Reduce costs
 Improve shareholder value
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Sources
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www.palm.com
www.handspring.com
www.sony.com
www.compaq.com
www.hp.com
www.sharpelectronics.com
www.toshiba.com
www.casio.com
www.hitachi.com
www.royal.com
www.uscensus.com
Sources
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Miyake, Kuriko. “Hitachi Unveils Plans for PDA,”
www.pcworld.com, January 9, 2002.
Pastore, Micheal. “PDA Market Slow in Q3,”
www.cyberatlas.internet.com, December 26, 2001.
Gray, Douglas F. “CES-Royal touts low-cost Linux PDA,”
InfoWorld Daily News, January 11, 2002.
“Product Launch: Acer aims high with PDA,” The Nation
(Thailand), January 12, 2002.
“Handspring Trips on Treo Timetable,” Communications Today,
January 17, 2002.
“Handspring Plans wireless Move, Posts Q2 Loss,”
ComputerWire, January 16, 2002.
Palm, Inc. Standard & Poor's Corporate Descriptions plus News,
Copyright 2002 The McGraw-Hill Companies, Inc. January 14,
2002
Ibid, Handspring.
Hart, Tole. “Telecommunications TeleViews,” Gartner, Inc. 18
January 2001.
Maarouf, Mostafa. “Wireless LAN: The Next Killer Application,”
Gartner, Inc. 17 May 2001;
Chielewski, Dawn C. SiliconValley.com.
Sources
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“Personal Digital Assistants” DSN Retailing Today Vol. 40 Iss. 7
Pg. 31
IDC Research – www.idc.com
www.cesinc.com/company/factsheet.html
NPD Intellect – The NPD Group www.npd.com
Stockton, Jeffrey. “Can the wireless Net Succeed in China?”
www.allnetdevices.com
Pastore, Michael. “Wireless Access Devices Look Toward 2001”,
CyberAtlas, February 16, 2001.
Franken, Stephanie. “Popularity of Pocket Computer Devices
Soars”, Pittsburgh Post-Gazette, August 12, 2000.
Driscoll, Clement. “Are Consumers Interested in Wireless
Internet Location-Based Services?” RCR Wireless News, March
19, 2001.
www.xilinx.com
“Jupiter NPD Consumer Survey,” Jupiter Media Matrix, June
2001.
Sources
Source
Information
Company Websites
Product, Pricing, and Strategies
Standard & Poor's Corporate Descriptions
Company Financials
PCWorld.com
New Products
CyberAtlas.com
State of the Industry and Forecasts
InfoWorld Daily News
Industry news
Communications Today
Company Specific information
Computer Wire
Company Specific information
Gartner, Inc.
Strategic alliances/tech breakthroughs
Silicon Valley.com
Technological breakthroughs
IDC Research
Market trends/tech breakthroughs
NPD Group
Seasonal and Industry figures
DSN Retailing Today
Industry figures and growth
www.cesinc.com
Industry figures and growth
allnetdevices.com
International information
RCR Wireless News
Demographic Information
www.xilinx.com
Demographic Information
Jupiter Media Matrix
Technology trends
Pittsburgh Post Gazette
Demographic Information