PDA makers battle falling sales growth

Vendors of personal digital assistants (PDAs) and the manufacturers of their components are urged to adjust their business strategies if they want to see market growth this year, a research firm announced on Saturday.

The US-based In-Stat MDR said the weak global economy, low consumer confidence in the US and reduced corporate spending on computer equipment led to slow PDA sales last year.

"The future will hinge on convincing consumers that PDAs can be more than just computer peripherals," Cindy Wolf, a research analyst at In-Stat MDR, said in a statement. "To that end, strategies for vendors and component manufacturers are adjusting."

The PDA market faces competition from smart mobile phones, or phones that include personal organizer functions such as diaries and address books, Wolf said.

Makers are now including more phone functions to fight back, and are developing devices that have more multimedia applications.

The makers of the chips that are used inside mobile phones are also condensing more functions onto one chip to make PDAs smaller. Only last week, the world's largest computer chip company, Intel Corp, launched its first chip specifically designed for mobile phones, but this chip could also be used in PDAs. Intel included phone functions, memory, better use of power to extend the life of phone batteries and wireless Internet on just one chip. Before the launch of the chip, Intel had concentrated on chips for computers.

The line between mobile phones and digital personal organizers is expected to blur.

In December 2002, US-based research firm International Data Corp estimated that the market for combined mobile phone and personal organizer devices would reach 63 million units by 2006.

One of the constraints on PDA market growth is sufficient memory to save color pictures, video and audio files. Wolf said that the industry was moving towards one add-on memory card standard, the Secure Digital (SD) flash card. The capacity of the SD card is growing and its price dropping, saving consumers money and space on their PDAs, she said.

After growing at 114 percent in 2000, and 18.3 percent in 2001, the global PDA market saw a slump of 9.1 percent last year, based on preliminary results released by Gartner Dataquest at the end of January. Some 12.2 million units were shipped last year, 20 percent fewer that Dataquest's original estimate of 15.5 million.

Dataquest said corporations lowered spending last year. "We estimate that about 70 percent of all PDAs are purchased by consumers and only 30 percent by enterprises," said Todd Kort, an analyst at Dataquest.

"The more lucrative enterprise market has been stagnant because of poor economic conditions and a perception that PDAs are not yet capable of delivering sufficient return on investment. The enterprise market is still another year away from embracing PDAs," Kort said.

Taiwan is a major player in the global PDA market. Of the 12.2 million shipped last year, 3.15 million originated here, according to the government-funded Market Intelligence Center.