The worldwide market for handheld computers declined slightly in the second quarter, as consumers continued to choose advanced mobile phones over the larger devices, a market research firm said this week.

Shipments of so-called "personal digital assistants" fell by 2.2 percent in the quarter ended 30 June to 2.2 million units from 2.22 million units the same period a year ago, International Data Corp. said in its quarterly report. Compared to the first quarter, shipments were up 3.2 percent.

In the second quarter, Sony became the latest casualty of the stagnant PDA market, deciding to no longer sell the devices in the United States and Europe. Sony has maintained a third-place position in the market for quite awhile, but apparently saw no payback in spending the money necessary to overtake Hewlett-Packard.

"Sony was perennially close to the second spot, but couldn't catch HP," IDC analyst Alex Slawsby said. "Further investment would have maintained Sony's position, but it wouldn't have brought the windfall necessary for the kind of growth companies usually seek."
Also in the market share game, Toshiba, which has been a regular top five, was pushed out by German manufacturer Medion AG.

The handheld-computer market, which held so much promise in the late 90s, has fallen victim to advanced cellular phones, which include many of the capabilities that consumers once found attractive in PDAs, such as the ability to manage contact lists and personal schedules.

"It's a market that will remain, but one without great prospects for expansion beyond its current position," Slawsby said.

PDAs, however, are not expected to disappear, at least for the foreseeable future. Mobile phones can't meet the needs of all consumers, and IDC expects enough people to prefer the larger screens and other unique capabilities of the PDAs to keep the market alive, albeit stagnant.

"Because these devices are so personal, there will never be one that fits all consumers," Slawsby said. "This market will remain, but it's one without great prospects for expansion."

PalmOne Incorporated continued to lead the market in the second quarter with a 42 percent share. While PalmOne's shipments increased only 0.6 percent, it gained 4 percent in market share over a year ago. Sequentially, shipments were up 14.1 percent.

In the second half of 2004, PalmOne's "challenge" will be to maintain its momentum while becoming the only major Palm OS vendor in the handheld market, following the departure of Sony, IDC said.

HP held on to the number two spot with a 39.2 percent increase in shipments from a year ago. Sequentially, however, HP saw shipments drop 8.2 percent and market share dip by 3 percent to 24.1 percent.

Among remaining top five vendors, number three Sony saw its market share slip 1.6 percent to 7.8 percent, as shipments declined 14.6 percent sequentially and 33.2 percent year-over-year. Dell's shipments increased 4.6 percent from last year, but dropped 7.8 percent sequentially, resulting in a slight loss of 0.8 percent in market share.

However, Dell's newest flagship handheld, the X30, is expected to boost shipments in the third quarter, IDC said.

Relative-newcomer Medion recaptured the fifth spot from Toshiba with a year-over-year 67.3 percent increase in shipments for a 4.1 percent market share.