Dell to Shake Up PDAs

Dell Computer Corp.'s (Nasdaq: DELL) imminent entry into the handheld device market will turn the sector on its head, according to Gartner/Dataquest principal analyst Todd Kort.

The emergence of Dell's low-cost Pocket PC-based device was flagged by Unstrung in August; and its tactics of undercutting the likes of Hewlett-Packard Co. (NYSE: HPQ) looks set to cause ructions in the market (see Why in Hell Is Dell After PDAs?).

"Dell's is a fairly standard, generic unit, though with a very good display -- the main point is the pricing," Kort tells Unstrung. So what's the price going to be? "I can't say, but existing suggestions are not wide of the mark," says Kort. We reported a rumored price of $299, compared with the typical prices of $500 that HP's iPaq device and other similar PDAs retail for. "It will be so much lower than the other major vendors it will reset expectations about how much that type of PDA costs. It's targeting the iPaq, but it will lower the sales of other vendors too. People will wait to get their hands on a Dell. I don't think Dell will be able to get enough units from its Taiwanese manufacturer, Wistron Corp., to meet demand."

Such a dramatic entry (no date has been publicized yet) will see weaker PDA players exit the market, believes the Gartner guy: "Wistron was also supplying Casio Computer Co. with its PDAs, but when Casio saw what Dell was planning it decided to withdraw from the market. Others have to be concerned that Dell's entry will damage their business. Some are already in a financially shaky position. The effect won't be immediate, but some firms will find themselves in pretty dire straits this time next year."

Using, as it does, Microsoft Corp.'s (Nasdaq: MSFT) Pocket PC operating system, Dell's product will boost Microsoft's share of the PDA market in terms of the OS used. Kort's latest figures on the PDA market already show the Redmond giant boosting its market share considerably (see Gartner: PDA Sales Up 1%). In the third quarter of this year, vendors using the Microsoft OS captured more than 30 percent of the global PDA market by units shipped, up from 16.2 percent in the third quarter of 2001. Microsoft's main rival, Palm Inc. (Nasdaq: PALM), is still the clear market leader in the OS space, with its licensees, including Sony Corp. and Handspring Inc. as well as Palm itself, accounting for nearly 49 percent of units shipped in the latest quarter. Significantly, though, that shows no change from the third quarter of 2001.

Kort expects the fourth quarter to be a good one for Palm, though. The last quarter of the year is always a strong one for those targeting the consumer market, he says, and Palm's sales are 70 percent in the consumer market. "This usually increases to 80 percent in the fourth quarter."

So when will Microsoft sail past Palm in the shipped units league table? "By my calculations, not until the end of 2005," says Kort. "But in terms of revenues from PDAs carrying these companies' operating system, Pocket PC is already as large as, if not larger than, Palm." He says the introduction of the Zire PDA (see Palm Intros $99 Handheld) could lead to even lower prices but higher unit shares for Palm. "I don't know how successful the Zire will be, but that unit could be costing only $35 or so to build, and that means the price could come down to as low as $60 in time. That could boost Palm's unit sales by as much as 1 million next year."

Microsoft's growing influence on the mobile phone and handheld sector is such that the software giant now reports revenues from a unit it calls the CE Mobility group, allowing investors and others to track the growth of this increasingly important market (see Microsoft at Mobile Crossroads). Indeed, Unstrung considers Microsoft's role in wireless important enough to have dedicated our most recent monthly Wireless Oracle report to that very topic: "Microsoft Mobility Tackles Hard Issues."

But returning to Gartner, its new figures also show that total global PDA shipments reached 2.6 million in the third quarter, just 0.9 percent up on a year ago. But units shipped in the first three quarters are down 8.3 percent on 2001. As a result, fourth-quarter sales will need to reach humdinger levels if annual growth is to be achieved. (Gartner didn't actually use the word humdinger, but we're sure that's what they meant.)

— Ray Le Maistre, European Editor, Unstrung www.unstrung.com

Editor's Note: Light Reading is not affiliated with Oracle Corporation.
Physical_Layer 12/4/2012 | 9:26:28 PM
re: Dell to Shake Up PDAs Danger device certainly looks cool. Would like to read the unstrung review.

BTW, Last quarter there were 403,000 BlackBerry subscribers as reported by RIM. Your 80K number was too low.
noitall 12/4/2012 | 9:26:46 PM
re: Dell to Shake Up PDAs Guilty as charged: I am a gadget freak. Understand Dell and Danger are fundamentally attacking different markets with different business models, but they will converge.

Users are still influential on I/T people. They will want an integrated PDA like Danger's. This won't happen overnight but will over time. Hopefully Danger will follow RIM's success and penetrate both markets (although I hear RIM's total user base is still only around 80,000 people). I think I know 80,000 people with Blackberrys myself.

Users should ask I/T people to deliver to them one device that communicates with their enterprise resources, and is something they can use as an entertainment and personal communcations/organizer type device they will carry around on weekends and spare time. Talk about a God Box!

I have too many devices. Still waiting for the one little box that does it all for mobility, and integrates into the sound and navigation systems of my car. Afraid I'll be waiting a long time.
joset01 12/4/2012 | 9:26:47 PM
re: Dell to Shake Up PDAs Yeah

I've managed to eventually get me hands on Danger's precious (only?) review copy. Its a very neat device, the only drag being that I have to give back to them very soon...there'll be a wireless gizmo piece on the Hiptop/Sidekick

But you are thinking like a gadget freak (I can understand that...). Dell doesn't give a damn about getting into the PDA market. They just figured that HP-Q uses its iPaq handheld device to drive revenues.No money is made from the device itself, but the handhelds are a useful lever when sold as part of a package with servers and PCs into the enterprise. And there is money to be made selling backend software and services to support the use of handhelds in the enterprise.

So they found someone that could make them really cheaply and went ahead with it.

Danger biz model is quite different, but also interesting...

noitall 12/4/2012 | 9:26:47 PM
re: Dell to Shake Up PDAs Who cares about Dell's PDA. I tell you, I've had a Palm, a Jornada with a wireless module (very bulky, buggy and costly), and now a blackberry and the Danger hiptop is much more interesting than all the others. It's down to $100 I hear...

No, unfortunately, I don't have Danger stock.
lrmobile_castro 12/4/2012 | 9:27:03 PM
re: Dell to Shake Up PDAs I think that both dell and microsoft are missing the mark on this one. Dell's PDA is boring and there is nothing other than price to differentiate it from any other PocketPC devices. Dell's influence on the PocketPc market, killing the margins, won't make for a healthy pocketpc segment. They also won't drive out palm because palm has volumes and a far more efficient and smaller OS.

Moreoever, the handheld market and the cellphone market are coming together. the latter should have shown us that sytle and differentation really do count in the handheld field. Just look at Nokia, and look at where smart phones are going. Smart phones will eventually do everything that PDAs do, and look at the competition that dell faces

Danger, Sony, sony-ericsson, Nokia, Handspring, and now even Palm itself are offering far more compelling products than the essentially one model cloned pocket pc device.

Net, Palm and symbian are a better bets in this segment (pda/smart phones) than MS. I doubt "hey dude you got a dell" is going to have the same impact here as it did in the PC business.
spc_rayella 12/4/2012 | 9:27:05 PM
re: Dell to Shake Up PDAs I think that's the new Dell laptop that is going to be retailing at $599, not the PDA.
"Dell unveiled the OptiPlex SX260 at a news conference Monday. The computer, designed with cramped Japanese houses in mind [[yadda yadda yadda]. The computer will be sold world-wide with prices starting at US$599, the firm said."

The chap at Gartner I spoke to knew the details of the Dell PDA but is under a non disclosure agreement. But he swears it is going to be cheaper than the likes of the iPaq.

As for the timescale, does anyone believe projected shipping dates any more these days? If Dell does miss the Christmas season it will have missed a great market entry opportunity, it seems. We'll see. Maybe they meant Christmas 2003. :-)

Unstrung Ray

angelseye2000 12/4/2012 | 9:27:06 PM
re: Dell to Shake Up PDAs The article 'Dell Computer to Enter Hand-Held Market Next Year' tells us that Dell will have a PDA out....."next year" and "will be sold world-wide with prices starting at US$599"

1. The Dell PDA has no *built-in Wireless (as far as i know)
2. What happened to the price rumor of $299?
3. What happened with the date annoucement of "due out for Christmas"?

Wistron lands 1.1 million PDA contract from Dell, due out for Christmas
David Tzeng, Taipei; Chou Hua-hsin, DigiTimes.com [Wednesday 31 July 2002]

Dell Computer has placed an order with Taiwanese PC contract maker Wistron to produce 1.1 million PDAs (personal digital assistants) for a Christmas-holiday launch, DigiTimes has learned.

Sources familiar with the matter said the device will become available in November at the earliest, with a launch price of US$299. It will run on MicrosoftGÇÖs Pocket PC software and shares similar, **if not the same, features and capabilities as the iPAQ, the best-selling Pocket PC-based PDA from Hewlett-Packard (HP), they said.


*/**Could Dell be shifting to an high-end pda with built-in Wireless? (see $599).

HP/iPaq 5000 series all with 2 Wireless built-in Functions; see link (all seem to have built-in BT=Bluetooth)

Very weird.

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