Populate or perish

It used to be a two-horse race. In the handheld market, Palm led the way in both hardware and software, enjoying massive mindshare among business executives and consumers alike. Then Compaq launched its iPAQ handheld, powered by Microsoft's Pocket PC operating system. The new kid on the block quickly established itself as the darling of the enterprise market and Palm's dominance showed the first signs of waning.

All of a sudden, manufacturers began to realise that they too could have a piece of the PDA pie.

It seems hardly a week goes by without the entry of some new handheld device destined to take the market by storm. Generally, entering the market requires allegiance to one or the other of the Palm and Microsoft operating systems. Toshiba has put its money behind the Pocket PC system, for example, while Sony has backed Palm for its Clie range of handhelds. However, the newest entrant to the market, Acer, has placed an eachway bet, offering both Pocket PC and Palm devices.

But can the Australian market sustain the plethora of PDA products that are out there? Certainly the market for handhelds is growing across both the consumer and enterprise sectors. Harvey Norman, for example, expects PDAs to be one of the best-selling products throughout the hectic Christmas season. But getting the mindshare of end users may prove difficult with the wealth of offerings that are now available.

"I think the market is going to get overcrowded and that some of the new vendors are in for a shock," says Inform analyst Luke Solymon. "They might enter the market, but they will also leave it."

Hewlett-Packard inherited a winning product in the iPAQ when it merged with HP. Its iPAQ H3870 was the top-selling handheld for June, according to Inform, and it continues to take market share from Palm. Renee Bassal, HP's product manager for smart handhelds and WLAN, says the product's success has a lot to do with its design and features such as extended warranty.

"I think the market will decide who will be the leaders - who will stay and who will go," she says. "But if you look at the specs and designs of the models that are being introduced today, they are pretty much the same features that our products have had for quite a while now."

Palm and iPAQ products accounted for eight of the top 10 best-selling products in June, according to Inform. With such strong incumbent players, new entrants must be able to differentiate their offerings to be successful.

Felix Wong, managing director of handheld distribution specialist Brightpoint, says the successful new entrants were vendors that had distinctive offerings for the market.

"Toshiba differentiated itself with the LAN connectivity and the first XScale processor, as well as a cool connector on the e740, which lets you connect to a VGA monitor," Wong says. "It has a wide range of products and it is the leader in notebooks, which stands it in good stead. If you look at the iPAQ, it has its sleeve. Each one has its own technology and its own claim to fame."

Solymon agrees that the point of difference is what will determine the fate of a product. "Unless you clearly make the product stand out, it is not going to be successful," he says. "Acer, for example, has entered at a very competitive price point and that should put it in a good position against its competitors.

"Sony has also done reasonably well due to its unique Sony-style branding. Its products aren't nearly as price-competitive, but it has addressed all the other issues."

The competitive landscape has changed dramatically in the last six months. HP's decision to drop its Jornada series meant that Toshiba quickly filled the number three vendor position, even though its products have only been in the Australian market for a few months. In contrast, Sharp has sold PDA products in Australia for the past four years. In Japan, its Zaurus range holds 50 per cent of the market, but it hasn't made much of a splash in Australian waters.

Joe Constantino, Sharp's general manager for marketing, says there is an increasing acceptance of new players. "Back then, Windows CE was new and unknown and Palm was the incumbent. It takes time to change people's views. As the market matured, people realised there was more than Palm, and these new guys have ridden that wave."

Sharp's latest product has its own point of differentiation. It runs on a completely different operating system. The Zaurus SL-5500 is a dedicated Linux open-source device, which is gaining popularity in the developer market as well as with Linux-based businesses. Sharp is also looking to take the product to the retail market.

"I think we will see substantial growth in the sector in the next two to five years," says Constantino. "Retailers are investing a lot of time and effort into the PDA market."

Rodney Orrock, Harvey Norman's national manager for computers and communications, says the PDA market is gaining momentum as manufacturers beat down the price in the lead-up to Christmas. "We've conducted over 3,000 individual online training sessions for PDA and mobile technology over the last couple of months," he says.

These days, handhelds extend far beyond the retail shelf. Vertical markets such as education, hospitality and manufacturing are where some of the most innovative solutions are being implemented and the handheld comes into its own.

HP's Bassal says the opportunity for the channel is in the enterprise, where the vendor acts as a point of contact to bring a range of channel players together. "Nine times out of 10 the opportunities come through the channel, because nine times out of 10 they are closer to the customer," she says. "We have a wealth of partners that we work with - solutions providers who develop applications and third-party vendors who provide accessories and expansion packs.

"There are so many vendors out there now that they [resellers] can pick and choose. But HP can offer them business partners that can bring the solution together."

It may perhaps be those third parties that make the difference as to who stays and who goes. Then again, it may be the operating system itself. Like the PC industry, the price of hardware continues to drop as vendors struggle to differentiate themselves. Operating systems, however, particularly Microsoft's Pocket PC platform, remain largely immune to the price squeeze.

"At this stage, there are lots of products out there, but there are still only two major players [for the OS] - HP and Toshiba," says Brightpoint's Wong. "Will it end up like the PC market where there is a place for everyone? I don't know. It is still early days."

Case study one: Palm

PalmTEQ uses more than just technology to pitch handheld solutions to the hospitality market. The WA-based provider realises that the most effective handheld installations are all about making its clients more profitable.

"The main thing is to help the customer take up the opportunities to review their method of operation," explains PalmTEQ general manager Richard Steers. "We pitch it by asking, ‘Are you interested in improving your profitability?' You can't really say no to that. Quite often they are sceptical but we let our previous customers be the proof, especially when the majority see a return on investment in six to 12 months."

For example, five table staff can be reorganised to three specialised waiters, while the other two can be runners, saving in staff costs, and helping the day-to-day operations run more smoothly.

PalmTEQ recently completed a handheld installation for international restaurant brand Wagamama in Sydney. It was a highly scheduled affair, with pre-programming and testing backed up by a dry run a week before the restaurant officially opened its doors. The process took around six weeks.

PalmTEQ was able to identify the opportunity through a business association and the company has implemented its own solutions to help Wagamama overcome many of the issues of wireless networking. PalmTEQ developed its own hardware and firmware for the solution for use on the Palm platform -- PalmTEQ takes an average Palm handheld and attaches a radio frequency transmitter.

"We've gone with the low-power, radio frequency option," Steers says. "It means superior battery life, which is imperative in the restaurant business. The staff are not transferring large amounts of data, so they can use variable power settings and multi-channels, which means we can punch through a lot of the ambient data that is out there. There is quite a bit of congestion coming in on 802.11b these days."

According to Steers, the Wireless LAN approach often doesn't fit in a restaurant environment. "It's not suited to the industry, and it doesn't penetrate walls and glass very well."

Case study two: iPAQ

Restaurant staff at Café La Vigna in the Italian Forum in Sydney's Leichhardt can now process orders at the table, using wireless technology built into HP's iPAQ handheld. The solution was put together by Sydney-based Quatro Systems over a six-week period.

Café La Vigna co-owner Tom Kapetanios wanted a wireless ordering system for staff to help eliminate congestion in the restaurant during busy periods.

"They came and spoke to us at a trade show," says Quatro's Nick Nikolakopouls. "They wanted a specific solution and when we showed it to them, they went for it."

Quatro's decision to use the HP iPAQ came down to a number of factors.

"We went for the iPAQ because of the size of the unit and because of the reflective screen, which means you can use it both indoors and outdoors," says Nikolakopouls. "That, and because it will work with Windows CE, so you get more functionality."

Quatro also integrated a software package called PixelPoint, which is designed to act as an interface between the handheld and existing software. "It fitted in with the specific requirements of Café La Vigna and our software developers in Canada recommended it."