Pocket PC players like Compaq and Hewlett-Packard are starting to gain on Palm devices in the colour personal digital assistant market, according to ACNielsen Canada.

The Markham, Ont.-based research firm Monday released the first report since it began tracking and measuring sales of PDAs earlier this year. According to the report, which is based on point-of-sale data from specialty chains, mass merchandisers, independents and other retailers, Palm held the lion’s share in total units sold between January and July of this year, capturing an estimated 73 per cent of the market. Handspring was a distant second with 13 per cent, followed by Compaq, HP, Casio and a variety of smaller players.

“We are starting to see a lot more competition in the colour side,” said ACNielsen analyst Jennifer Kidd. “You see the whole dynamics of who the key players when you look at the overall market versus the colour market. The colour market is really the area that is growing the fastest.”

In the colour unit category, Palm was still on top, but with just over half the market share at 54 per cent. Here, Compaq’s iPaq managed 20 per cent of the market while HP managed 16 per cent.

Last year Compaq dealt with shortages of its popular iPaq handheld by quickly introducing a monochrome version. However Kidd said that the price of colour PDAs is slowly starting to come down, accelerating the sub-category’s momentum to account for 48 per cent of the overall market, up from 26 per cent last year. Though HP recently released a new version of its Jornada PDA running on PocketPC 2002, the company will have to deal with overlap in its product line if its proposed takeover of Compaq goes through.

“It will be really interesting to see how that whole thing plays out,” said Kidd. “Both companies have a really strong product line and it’s just a matter of the company taking the efficiencies and the quality from both lines and trying to make the most sense of it. They’ve got great potential.”

Kidd noted the efforts by Handspring and others to offer voice and other modules will contribute to the sector’s long-term health.

“As soon as the PDAs enhance their functionality even more, it’s going to be a question of how much you can do on your PDA versus the necessity of carrying around a notebook,” she said. “That could become your primary mobile device.”

ACNielsen began including PDAs as part of its regular Computer Index Services because more tier-one computer companies have added devices to their lineups.

“It’s got one of the highest-growth categories out of all the categories we track,” she said. “This is where you’re starting to see a lot of convergence. You’re seeing a lot of cell phone functionality on your PDA as well as the other way around — you’re seeing smart cell phones come out.”

ACNielsen will be offering the PDA market research as part of the Index or as a standalone report, and will include information on PDA peripherals as well.

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