Wireless networking providers pushed sales of PDAs (personal digital assistants) to a record high, up 2.7 percent from last year to 3.7 million units shipped in the second quarter.
But hardware makers weren't as happy, as they watched worldwide PDA revenue fall 4.1 percent to US$1.38 billion, according to a report released Monday by Gartner.
The problem was that, compared to the second quarter of 2005, the average selling price of a PDA fell 6 percent to US$373, a victim of aging product lines and generous subsidies offered by wireless providers.
Market leaders weren't able to react fast enough to the advent of integrated WANs (wide area networks), and the top three PDA vendors lost heavy market share to smaller vendors.
Research in Motion (RIM), Palm and Hewlett-Packard (HP) are still the top three sellers of PDAs, but they all lost share to Mio Technology, Motorola and Danger Inc.
RIM saw its market share fall just 1.1 percent, but some competitors had steep declines, such as Palm's drop of 26.7 percent, HP's drop of 15.1 percent and Nokia's drop of 40.5 percent. In contrast, Mio Technology enjoyed a 65.4 percent rise in market share.
More and more PDA models have keyboards, forcing vendors to innovate elsewhere. Mio was successful because it focused on one of its strengths, GPS (Global Positioning System) satellite navigation, said Todd Kort, principal research analyst for Gartner.
Still, Mio's ascent pushed it only as far as fourth place with 8.2 percent overall market share. RIM remained the leader with 22.5 percent market share, compared to Palm with 12.7 percent and HP with 10.4 percent.
The other winner in this fast-changing market was Microsoft, whose Windows Mobile OS accounted for 54.2 percent of PDA platforms sold in the second quarter, compared to 22.5 percent with the RIM OS and 13.4 percent with the Palm OS.
The Gartner study defines a PDA as a handheld computer used primarily for storing data, so these numbers do not include smart phones such as Palm's Treo 700w or RIM's Blackberry 71xx, but they do include cellular PDAs such as HP's iPaq 69xx and Nokia's E61.