PDA market unlikely to bottom out in short term
China's hand-held computer market continued tumbling in last year's fourth quarter, and analysts have suggested the trend is unlikely to be reversed in the near future.
Sales of PDAs (personal digital assistants) in China shrank about 10 percent in the fourth quarter, year-on-year, said Beijing-based Analysys Consulting.
The decline was largely attributed to dwindling market demands due to lack of innovations by manufacturers, though numerous new products had been launched throughout the quarter, the research house said.
Sales of high-end PDAs, mainly wireless PDAs and Pocket PCs, accounted for 8.9 percent of total sales in the quarter.
That was far from enough to stimulate the lacklustre PDA market.
Many trimmed-down versions of PDAs received a cold response in the market due to their still-high prices and manufacturers' inadequate understanding of consumers' diverse needs.
The dismal PDA market has also significantly undermined distributors' profits, and in turn dampened their enthusiasm to promote new products.
Distributors' fretted interest in promotion had given way to PDAs' substitutes, which ate into PDA manufacturers's sales and profits.
Major PDA manufacturers managed to retain their respective market shares in the fourth quarter, but their profits decreased significantly.
Analysys Consulting said PDA manufacturers did not find a unique selling point during the last year.
Most manufacturers now are pinning their hopes on wireless PDAs, Pocket PCs and market opportunities brought on by the entry of global PDA giant Palm into the Chinese market, it said.
The predictable sales growths of wireless PDAs and Pocket PCs will be the major drivers fuelling the PDA market in the future, as the roll-out of wireless networks gains pace in China.
PalmSource Inc, a subsidiary of Palm Inc, in December signed a licensing agreement with China's Legend Group and GSL Group Sense (International) Ltd (GSL) to provide its Palm OS (operating system) platform.
Legend is China's largest PC vendor, while GSL produces the famous electronic dictionary sold under the brand name of Instant-Dict.
Analysys Consulting predicts the Chinese companies will launch their PDAs, using the Palm OS platform, next month.
There are no apparent signs the PDA market will bottom out in the short term, the research house said.
It predicts sales of PDAs will continue shrinking in the first half of this year, but the decline might slow down in the second half.
Competition in the PDA market this year will focus on the OS, products and promotions, Analysys Consulting suggested.
There are three OS platforms in the Chinese market: Symbian, used by traditional handset manufacturers Nokia and Motorola; Win CE, touted by software behemoth Microsoft; and the newcomer, Palm.
More than 20 companies in China make PDAs, which are not compatible with each other. That hinders development of applications.
Palm's entry into the Chinese market, and its tie-ups with Legend and GSL, will offer more OS choices in the PDA market, Analysys Consulting said.
The rivalry between PDAs using Palm and Win CE is expected to intensify in the mid-range market.
It is unclear which OS platform will become dominant in China, the world's second-largest hand-held market, behind the United States.
The Chinese market accounts for 20 percent of the world's total PDA sales, and 71 percent of sales in the Asia-Pacific region.
The incompatibility of different OS platforms could bring inconvenience to consumers and result in a rivalry among industry standards. That would add uncertainties to the market's performance.
Mid-range PDAs will remain the mainstream products in the marketplace this year.
PDAs' prices are projected to fall this year, and competition is expected to focus on PDAs priced between 1,800-2,500 yuan (US$217-301).
Manufacturers are expected to trim down functions and improve software and hardware to enhance the competitiveness of their products, Analysys Consulting said.