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Compaq Overtakes Palm As Revenue Leader In PDAs

6/19/2001 11:53:00 AM Eastern

San Jose, Calif - A study by Dataquest named Compaq as the leading handheld supplier in terms of revenue for the current quarter, effectively knocking Palm out of first place.

Gartner Dataquest, expects Compaq's revenues for its Windows CE-based iPAQ handheld will hit $200 million for the second quarter ending June 30. This will total more than Palm and Handspring's revenues combined. Palm's sales are expected to fall between $130 million to $135 million for its fourth quarter and Handspring itself announced it expects revenues in the $60 million to $65 million range. However, Dataquest said Palm retains a strong lead in unit sales.

Palm's second quarter unit sales for the calendar year are estimated at 600,000 worldwide, down from 1.8 million during the first quarter. Excess inventory in the channel through February caused the company to slow shipments, said Dataquest principal analyst Todd Kort. Handspring's unit sales are estimated at 330,000 for its second quarter, down from 575, 000 during the first quarter, said Dataquest. Compaq, conversely ramped its volume from 278,000 units in the first quarter to 475,000 units this quarter (a high percentage of that being its color model), said Kort.

The surge in Compaq's iPAQ revenues, is tied to its higher average selling price of $500 versus Palm's $200. But Dataquest analysts said the shift in revenue share also mimics a shift in the handheld market from a primarily consumer item to an enterprise tool. Many companies are using the products to replace laptops, Dataquest claimed, and are therefore targeting the high end Window CE-based models, with faster and more powerful 32-bit processors, robust corporate e-mail connectivity, short messaging and data base connectivity.

Said Dataquest vice president of mobile computing, Ken Dulaney, 'Its really a battle for the high end and Compaq is succeeding with its greater functionality and color screens, and most importantly, its leveraging of Microsoft's connectivity to the back office applications. We are moving out of the organizer generation for handhelds and into the enterprise generation where we are interested not only in names and addresses, but what we can connect to.'

Although Palm must improve its enterprise strategy, said Dulaney, it is not yet out of the picture. 'I don't think Palm is out of this by any means. I think they have to establish relations with Microsoft and they have to establish relationships with IBM, which must counter Microsoft with something against Notes,' he claimed.

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