Handheld sales set to rise as PC sales flatten

The simultaneous saturation and fragmentation of the desktop PC market will coincide with the rapid rise in use of handheld devices in New Zealand - though there's 10 to 15 years' life in the PC market yet, says research company IDC. PC sales growth in 1998 increased 8.4% over the previous year, according to IDC. But only 22% of PCs sold last year - amounting to 56,000 units - were shipped to first-time buyers.

The simultaneous saturation and fragmentation of the desktop PC market will coincide with the rapid rise in use of handheld devices in New Zealand - though there's 10 to 15 years' life in the PC market yet, says research company IDC.

PC sales growth in 1998 increased 8.4% over the previous year, according to IDC. But only 22% of PCs sold last year - amounting to 56,000 units - were shipped to first-time buyers, according to Graham Penn, IDC Australia's general manager of research, speaking last week at its annual briefing on the IT market, Directions 99. The remainder were repeat sales. And with 1.2 million PCs installed (out of a population of about 3.8 million) growth will stay in single figures for the next five years, IDC says.

Meanwhile, "handheld companion" sales - they are marketed under a variety of names - are set to climb from 7600 units last year to 18,500 in 2002, IDC predicts.

Asia-Pacific is set to become the fastest growing market for what IDC calls "smart handheld devices", reaching over 80% compound annual growth between this year and 2002, by this date totalling 7% of the market.

Australia and New Zealand represent 45% of the Asia-Pacific market.

Future likely "information appliances" will include NetTVs, screen phones, Internet smart handheld devices, Net gaming devices and consumer network computers among others, IDC says.

Handheld devices must be simple to use, perhaps being application-specific, not be overweighed by features, and be priced and "positioned" in the market correctly to succeed, says Penn. They are likely to complement PC use and functionality rather than replace PCs, he says.

"There is no one universally successful pro-duct," says Penn, though 3Com's Palm Pilot comes close, he says. This device is driving much of the market growth at present. IS management of multiple devices is likely to be an ongoing issue. Software and communications ability must meed user needs, and training cannot be a cost issue, says IDC. "[These devices] can't be technology islands," says Penn.

Meanwhile, the top four PC vendors worldwide, Compaq, IBM, HP and Dell, are solidifying their hold in New Zealand, IDC says, though local assemblers continue to claim about 45% of the market. IDC puts local assemblers at about 33% of the overall PC market. Hewlett-Packard and Dell made strong gains in market share between 1997 and 1998, Dell moving from about 2.5% of the market to about 6%, and HP moving from 6.3% to 13.1%. IBM and Toshiba made smaller gains, while Compaq and PC Direct loss some ground.

Nevertheless, revenue opportunities remain in the PC "value chain", says Penn, in such areas as repairs and technical support, configuration and customisation, and financing and leasing.

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