While Palm clearly dominates the handheld market today, analysts say they are seeing strong buyer interest in Palm's biggest US competitor, the iPaq from Compaq.
Palm is expected to lose the leadership in revenue from its various handhelds to iPaq, possibly as early as the end of the quarter, analysts at Dataquest, a unit of Gartner, said today.
Dataquest analysts said Palm will have revenue of about $US135 ($A260) million in the quarter ending June 1. Yet Compaq appears likely to take the lead in revenue for handhelds for the first time, with more than $US200 ($A386) million in revenue expected.
Even combining Palm's revenue with those of Handspring, a Palm OS licensee, Compaq's revenue should be greater. Handspring is expected to show about $US65 ($A125) million in revenue for the quarter.
Part of the reason for the change is that iPaq machines sell for much more than Palms, Dataquest said. iPaqs list for between $US399 ($A770) and $US599 ($A1155) each, while Palms range from $US99 ($A191) to $US449 ($A866).
Another reason, Palm is "well behind the competition in implementing . . . wireless technologies and this lack of innovation is a big contributor to its declining fortunes," said Todd Kort, a Dataquest analyst.
Corporate users especially want devices with wireless access to corporate e-mail, short message services, wireless Local Area Networking and integration with a cell phone, he said.
Ken Dulaney, an analyst at Gartner, said the Windows CE platform used by the iPaq offers smoother functions with the popular corporate applications of Outlook and Office.
While Dulaney said the Palm device "remains a solid choice for enterprise use," he urged corporate buyers not to commit to any vendor beyond two years, at which time they should evaluate Palm against competitors.
"Enterprises are ready for
second-generation handhelds, which are much more than personal digital assistants," Dulaney said. "They want access to corporate information on Microsoft servers, mainly."
Although Palm has focused on features such as long battery life, enterprise users seem to be saying they prefer colour screens and other functionality, he said. Many enterprise users are charging batteries for mobile phones every day or every other day and use that time to also charge handhelds, so they don't need the longer battery life.