FRAMINGHAM, Mass., Oct. 27, 2005 -- The worldwide market for handheld devices experienced its seventh consecutive quarter of year-over-year decline in the third quarter of 2005. According to IDC's Worldwide Handheld QView, device shipments decreased 16.9% year over year and fell 8.8% sequentially in 3Q05 to 1.6 million units.

Even as the overall market continues to trend downwards, device manufacturers are steadily pushing forward with new product introductions, software upgrades, and solution deployment, particularly GPS. Given these improvements and the upcoming holiday season, shipments are expected to increase sequentially but decline year over year in the fourth quarter. At the same time, the growth of converged mobile devices, which combine voice and data capabilities in a single form factor, is placing heightened pressure on the handheld market. Those vendors who offer both devices are starting to see shipments of converged mobile devices equal or surpass shipments of handheld devices.

"The combination of tremendous competition from converged mobile devices with waning consumer demand for handhelds is forcing manufacturers to search for new or improved solutions that leverage existing hardware and software capabilities," said Ramon Llamas, research analyst in IDC's Mobile Markets program. "Offering solutions beyond PIM, such as GPS, and reaching out towards first-time users are important steps, but will not necessarily bring about a return to growth. Finding and expanding more solutions to modern mobile consumers and enterprises have become imperatives for the handheld market to drive growth."

Vendor Highlights

Palm. Leading the market is Palm, which experienced a 10.8% decline in shipments sequentially and a 22.7% decline year over year. For the first time, Palm's shipments of converged mobile devices outpaced the company's handheld devices. At the same time, the company augmented its portfolio with two new devices: the Z22, aimed at the first-time user, and the TX, targeted at advanced users on a budget.

HP. Thanks to new product introductions in Europe and Asia/Pacific, HP grew 4.4% sequentially but decreased 35.4% year over year, maintaining its number 2 position. With devices aimed at enterprise and consumer users along a broad range of price points and its growing lineup of converged mobile devices, HP moves closer to balancing its portfolio across both markets.

Acer. Marking its third consecutive quarter in the Top 5 is Acer, which saw 5.3% sequential growth but an astounding 421.0% year-over-year growth. A year ago, the company was a smaller player in the worldwide market, but has since benefited from the departure of other companies. Acer has yet to create a global footprint as most of its shipments remain only in Europe and Asia/Pacific, but at the same time still enjoys the popularity of its consumer-targeted n35 device.

Dell. Holding steady in the number 4 position, Dell experienced a 9.6% sequential decline and a year-over-year decline of 13.9% in the third quarter. With the X3, X3i, and X5 all but gone from its lineup and the X50 and X30 reaching the end of their product lifecycles, Dell updated its portfolio with the introduction of the X51v. In addition, Dell's direct-sales model and ability to bundle its devices with other packages contributed to the company's continued success in the handheld market.

Mio. New to the Top 5 list this quarter is Mio, which experienced a sequential decline of 22.6%, but impressive 58.0% growth from one year ago. Like third place Acer, Mio was a smaller player a year ago with shipment levels that kept it well outside the Top 5. But thanks to the success of its GPS-enabled 168, 268, and 269-series product lines, the company was able to slip past previous number 5 vendor Yakumo.

Top 5 Vendors, Worldwide Handheld Device Shipments and Market Share, 3Q 2005 (Preliminary)

                   3Q 2005      3Q 2005      3Q 2004       3Q 2004
 Rank    Vendor    Shipments  Market Share   Shipments    Market Share
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  1       Palm     569,388       33.8%       736,481         36.4%
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  2       HP       397,016       23.6%       615,515         30.4%
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  3       Acer     188,760       11.2%        36,232          1.8%
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  4       Dell     162,000        9.6%       188,200          9.3%
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  5       Mio       85,609        5.1%        54,172          2.7%
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          Others   282,780       16.8%       393,552         19.4%
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          Total  1,685,553      100.0%     2,024,152        100.0%
----------------------------------------------------------------------

Source: IDC, October 26, 2005

Notes:

-- Vendor shipments are branded shipments and exclude OEM sales for all vendors.

-- Handheld devices are pocket-sized, either pen or keypad-centric, and are capable of synchronizing with desktop or laptop computers. Handheld devices are designed to access and manage data including office documents, multimedia, and games.

-- Handheld devices do not include telephony but may include wireless capabilities that enable Internet access and text communication. These devices feature evolved operating systems or applications environments such as the Palm OS, Windows Mobile Pocket PC, Linux, or other proprietary platforms with the ability to download, run applications, and store user data beyond their required PIM capabilities.

IDC's Worldwide Handheld QView provides device vendors, software developers, service providers, and component suppliers with timely and accurate information on the worldwide handheld market. The program provides quarterly measurements of worldwide unit shipments and vendor market shares.

For more information about IDC's Worldwide Handheld QView program, please contact Jonathan Guloyan at 508-935-4296 or jguloyan@idc.com.

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IDC
Ramon Llamas, 508-935-4736
rllamas@idc.com
or
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press@idc.com