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PDA sector seeks fresh momentum

The stagnant market for personal digital assistants (PDA) can only be revived by developing the handheld computers into devices for both work and play, industry insiders said yesterday.

"The market for pure PDAs that function as just an organizer or for data storage is shrinking," said Jim Tsai (蔡進明), Taiwan sales manager with PalmOne Inc's Asia Pacific branch.

Making PDAs a necessity for up to 90 percent of daily activities will be key to the future of the handheld devices, Tsai said.

PalmOne Inc, which International Data Corporation (IDC) ranked as the world's largest handheld device vendor with 37 percent market share last year, yesterday rolled out its newest model, Zire72, in Taiwan, following its global launch on April 29.

The Zire72, priced at NT$10,980, can take photos with an integrated 1.2-million megapixel digital camera, and play short films and MP3 music files. The device is Microsoft Office compatible and allows users to surf the Internet with built-in Bluetooth technology.

"This is a product for both work and fun and we hope to sell 3 million units within a year of launch," Tsai said.

With the production of most of PalmOne's PDAs outsourced to local contract makers, including Asustek Computer Inc (華碩) and Inventec Appliances Corp (英華達), Taiwanese makers could benefit from the deal, an analyst said.

"Contract makers see a decent gross margin of between 20 percent and 25 percent from making wireless PDAs and an average of 15 percent on conventional PDAs," said Calvin Wei (魏建發), an analyst at Yuanta Core Pacific Capital Management (元大京華投顧).

Taiwanese original-equipment-manufacturers shipped nearly 1.8 million PDAs in the first quarter, about 70 percent more than a year ago, as handheld device vendors like PalmOne, Hewlett-Packard Co and Dell Inc placed more orders, according to figures by local research house Market Intelligence Institute (MIC) under the Institute for Information Industry (資策會).

Local makers are expected to ship 1.8 million units in this quarter, MIC said.

Growth in the market for handheld devices, however, appears to have reached a ceiling.

The global market dropped to 11.4 million units last year from 12.2 million units in 2002, according to MIC.

The research house forecasted shipments to grow to 12 million units this year, bolstered by the global economic recovery.

Smartphones that combine communication and some PDA functions are expected to boom as their prices fall next year, further squeezing the PDA sector, especially the middle and low-end gadgets priced under US$299, MIC analyst Annie Yang (楊惠安) said.

Before then, the handheld devices need to evolve into wireless and multimedia gadgets to keep their appeal to users, Yang said.
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