MARKET researcher says Palm regains lead in handheld device revenues

Monday, November 5th 2001, 12:00 am
By: News On 6

SAN JOSE, California (AP) _ Palm Inc. still faces stiff competition from its rivals, but it regained the lead in handheld device revenues, toppling Compaq Computer Corp.'s brief reign.

In a report released Monday, market research firm Gartner Dataquest said Compaq shipments worldwide in the third quarter dropped from 450,000 to 185,000, garnering it about dlrs 83 million in revenues. Palm shipped 754,000 units, down from 890,000 the quarter before, and had about dlrs 200 million in revenues, Gartner said.

Palm has always remained the world's leading vendor of personal digital assistants, but it lost the top spot in terms of revenue in the second calendar quarter as sales of Compaq's rival iPaq devices _ which are typically twice the price of Palm products _ rose, according to Gartner.

At the same time, Palm sales dropped dramatically as the economy slowed and the company moved to a new product line.

It was the Santa Clara-based company's first loss in revenue leadership since it debuted its first handheld device in 1996.

Analysts had expected Palm to regain its revenue leadership position within one or two quarters _ once it sifted through its own troubles.

Gartner analyst Todd Kort said it came sooner than later as consumers apparently wanted to wait for the October launch of Microsoft's Pocket PC 2002, which is the operating system for Compaq's iPaq handhelds, Hewlett-Packard's Jornada products and a growing number of other new handhelds.

Still, Palm's once high-flying dominance in the fast-growing handheld device market has eroded and more competitors are coming on board.

The Palm operating system, which is used also by rival makers including Handspring Inc. and Sony Corp., accounted for about 52 percent of handheld devices sold worldwide in the third quarter, up slightly from 49 percent in the second quarter.

Microsoft's Pocket PC share fell to about 18 percent from 30 percent from the previous quarter. Kort said proprietary operating systems by Casio and a growing crop of Chinese vendors now make up roughly a fourth of all handheld devices sold worldwide.

On the device side, Palm leads in the third quarter with 30 percent market share as Handspring moved ahead of Compaq into second place with nearly 14 percent of the market share. Compaq had just over 7 percent, Casio followed at 5.6 percent and Hewlett-Packard came in fifth at 5.3 percent, according to Gartner.