Wednesday, March 02, 2005

Death of the PDA, take III Study Predicts Steep Decline for PDA Market

The PDA has come and gone a few times, most famously with the Newton. Now the Palm and PocketPC devices again appear to be going away:
... the traditional PDA is heading for significant declines in sales, and in fact is nearing the end of its life as a major product segment, according to In-Stat. Shipments reached only 8.7 million units in 2004, down from 10 million in 2003, the high-tech market research firm says.

The outlook for upcoming years is not good, as the PDA market will have a negative Compound Annual Growth Rate (CAGR) of -21.5% during the 2004-2009 period. By 2009, it is expected that this segment will be composed of devices designed for specific vertical markets and low-end products. The market decline will occur as users switch to other products, such as smartphones and portable media players, a natural evolution of the category...
The market has been dying for years, but I don't agree that "smartphones" and "portable media players" are a natural extension of the market.

The original Palm vision was a personal organizer that was also an open, lightweight, low capacity, application platform. It's strength was synchronization and desktop integration and utter, astounding, reliability. It was inexpensive (a tenth the cost of a laptop, vs today's devices that are can be 60% of the price of a very nice iBook.) and semi-disposable with a strong desktop support.

There's nothing comparable today. Nothing.

Why not? That's the interesting question. I think there was once a limited but decent market for this kind of device. That market was fragmented and obliterated:
  1. It seems odd now, but for a time Microsoft felt threatened by the Palm. They responded with a huge effort that produced a lot of very defective products that fell short of vast technical ambitions. Users of these products will never touch a PDA again -- having a personal organizer fail is a traumatic experience. The PocketPC is probably as robust as the unreliable Palm PDAs left, but the market to support it is quite small.

  2. Microsoft Exchange took over the corporate world. Microsoft had no incentive to support Palm synching with Exchange server. Very few PalmOS users survived the experience of synching a PalmOS device with an Exchange server. PocketPC users didn't do much better at first; ActiveSync was a disaster for years. Then the CrackBerry came in and wiped out the residual corporate PDA users. Again, market attrition.

  3. Pocket competition. Even as American men got heavier (so less able to carry a pocket device), the PDAs got bigger and heavier. Soon the PDA was pushed out of the pocket -- to compete with iPods (new), laptops (old) and phones (old). That's a lot of competition.

  4. Palm lost its way in a series of bungles and mistakes. They also completely lost their original vision. The internet boom and bust didn't help.

  5. Even as PDAs got big and costly, laptops got smaller and cheaper. If a computing device doesn't fit in the pocket, it might as well run OS X or XP.
So the market is going to go away for a while. It'll be back one day. We boomers desperately need a wearable (or pocketable) "brain" that's reliable, robust and integrated with the desktop -- a true PDA. It's going to take a few years for a new group of naive (meaning not bitter and crispy) users to emerge, and adopt a new PDA solution. Not a phone, but something that with a bluetooth earpiece that does VOIP communication and that can replace a phone. Not an iPod, but it will have a 100 GB internal drive and will play music. Not running HotSync, but perhaps SyncML. Not a BlackBerry, but it needs to work seamlessly with an Exchange server. With multiple input options and a good combination of both voice command, word recognition, and stylus interaction. Yes, and with a camera too.

Who knows, maybe it will come from Apple. Jobs isn't getting any younger. Soon he'll need a pocket brain ...

Update: for a typical tale of why the Palm platform died, see this post: Daily Gadget - My Love Affair is Over

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