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Compaq knocks Handspring out of number two slot

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Gartner Dataquest's latest figures for the PDA market during the second quarter of the year continue to show what a tough time Palm had of three-month period.

Not only did its own marketshare fall, from 50.4 per cent in Q1 to 32.1 per cent in Q2, but arch-rival Compaq bucked the downward trend by more than doubling its marketshare, from 7.8 per cent to 16.1 per cent.

Overall PDA shipments were down 21 per cent, falling from Q1's 3.55 million units to 2.8 million. Compaq's sales jump - it sold 278,000 PDAs in Q1, 450,000 in Q2 - even took it above PalmOS licensee Handspring, for a long time the world's number two PDA supplier.

Handspring retained the number two position in the US, however, with a 17.3 per cent share of the market, compared to Compaq's 16 per cent. Palm took 40 per cent of the US market during Q2, down from 54.2 per cent in Q1.

All of which tells us that Palm shouldn't be written off quite as much as some observers have done. Palm does have to work hard in the European market, but the US and combined global figures suggest it still has a solid market lead - even during a period when sales were down across the board and when it had undergone a very poor product transition.

That's not to suggest of course that all is well with Palm - the company will have to work to ensure that Compaq's gains don't come at its own expense or of its Palm OS licensees.

Market watcher the Aberdeen Group last week reckoned PocketPC will own more of the market than Palm by 2005, but that's too far off to be meaningful - simply, too much can happen in that space of time.

Aberdeen's thesis is based on the corporate market as the key driver for PDA sales. Dataquest broadly concurs with that viewpoint. Aberdeen is keen to try and devine some technological reason why enterprises will choose Windows CE over the Palm OS, but the real advantages the Microsoft platform has are perceived familiarity with the apps and SO, and, above all, Compaq's corporate sales force.

Palm can target both, and the span of years between now and 2005 is more than enough time to do so, particularly with improved ARM-based and wireless products on the way. That goes double if the much-rumoured reliability problems hit Compaq's iPaq sales hard. ®

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