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Sony To Abandon U.S. PDA Market

6/01/2004 08:46:00 PM Eastern

San Jose, Calif. - Sony Electronics said it would no longer sell Clie PDAs in the U.S. as of this fall, focusing instead on personal devices with communications capability.

Sony’s decision appears to reflect the general industry shift in PDAs to communications based devices or smartphones.

A spokeswoman for Sony said, “Sony continues to view mobile devices as a key pillar to our core business growth strategy. We will continue to provide our customers with an environment where they can enjoy movies, games and music on a device that is easy to carry anywhere. At the same time, Sony views wireless communication as an important feature on mobile devices. We will continue to develop in this direction including continuing our collaboration with Sony Ericsson.”

Sony said it would continue to produce Clies, however, for the Japanese market.

Sony Ericsson Mobile Communications based in Stockholm, Sweden is a joint venture between Sweden’s LM Ericsson and Japan’s Sony. The company’s sales are skyrocketing. It reported a 66 percent increase for the first quarter hitting $1.6 billion. Sony Ericsson also reported a 63 percent increase in cell phone unit shipments for the quarter, claiming sales of its camera phones were especially strong.

IDC, Framingham, Mass., said Sony’s decision to stop selling Clie’s in the US looks to be a wise one, as there is little growth in PDAs and as Sony was not a top player in the market. “Mobile phones are where it’s at in growth. There wasn’t much more for Sony to accomplish. It wasn’t going to dominate the industry; palmOne was still going to maintain a sizeable lead and there’s not much growth in handhelds anywhere in the world,” said senior analyst Alex Slawsby, adding, “It seems to make more sense for them to focus those resources elsewhere.”

Slawsby noted that slow PDA growth has caused others to exit the category. JVC and Gateway had both announced entries in the market in July of last year, but never shipped the products.

In the first quarter of 2004, 855,000 PDAs shipped in the US, marking the first quarter since the mid nineties that the business failed to ship a million units, said IDC.

Sony’s exit may be a boon to palmOne, which is likely to pick up some of Sony’s share. PalmSource, however, is expected to take a hit in licensing revenues, as Sony is it’s second largest customer, said Slawsby.

PalmOne’s US market share in Q1 was 49 percent compared to Hewlett-Packard’s share at 20 percent, Dell’s share at 13 percent and Sony’s share at 12 percent, said IDC. Worldwide, Sony was the number three player with a market share of nine percent, said IDC.

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