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Smartphones Set To Rival PDAs

The traditional PDA could be facing an uphill battle as smartphones take over as the key growth segment in handhelds and push down traditional PDA prices to as low as $50, according to analysts.

A recent report by IDC, Framingham, Mass., found traditional PDA sales will level off while U.S. sales of smartphones, and other merged mobile devices, will grow at a compound annual growth rate (CAGR) of 49 percent through 2007. Smartphone sales will total 3.4 million units in the U.S. in 2003, reaching 25 million by 2007.

On a worldwide basis the trend to smartphones is far greater, and will further encourage suppliers to concentrate these devices, said IDC. The CAGR for worldwide smartphone sales through 2007 is forecast at 86 percent, while the traditional PDA will decline by 8.4 percent to 11.35 million units this year, marking its second straight year of decline, said IDC.

At the same time, in the U.S., Palm prices are dropping to new lows and a price war between Dell and Hewlett-Packard has brought Pocket PC prices down in the $199 space.

“Palm is expected to refresh its line in October with a new $99 product which could mean the current Zire falls to $79. By January, you might find devices for $45 or $50. I’ve already seen specials for $60,” said principal analyst Todd Kort for Dataquest, San Jose, Calif.

Consultant Larry Reich of Digital Age, Westfield, N.J., noted that price deterioration is part of a greater trend in all computer segments. “Desktops are now at $399, or even $169 for the new Lindows machine, and notebooks are falling to $799.” In the PDA camp, he estimates that WiFi- and Bluetooth-enabled products, now at $400 to $700 could “bottom out” at $299 in six to 12 months.

A Palm spokesman was not available for comment.

Not all analysts say prices will drop that rapidly. IDC analyst Alex Slawsby said name brand PDAs will not reach the $50 mark until late in 2004.

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