PDA market clicks into high gear

Since Palm launched its first handheld computer in 1996, the market for such PDAs (Personal Digital Assistants) has continued to snowball. Despite a decline in worldwide unit shipments at the start of the year, Palm is still the market leader, claiming 39% share for Q1 2002 according to Framingham, Mass.-based researcher IDC (See Table). However, competition is growing and prices are dropping as handheld devices become increasingly commonplace in both the corporate and consumer worlds.

Since Palm launched its first handheld computer in 1996, the market for such PDAs (Personal Digital Assistants) has continued to snowball. Despite a decline in worldwide unit shipments at the start of the year, Palm is still the market leader, claiming 39% share for Q1 2002 according to Framingham, Mass.-based researcher IDC (See Table). However, competition is growing and prices are dropping as handheld devices become increasingly commonplace in both the corporate and consumer worlds.

IDC Canada estimates that Canada’s handheld market will grow by 19% in terms of shipments from 2001 to 2002. ‘This is a significant growth when you compare it to the PC market which is likely to be closer to 2 or 3%,’ says Warren Chaisatien, an analyst at Toronto-based IDC Canada. While IDC predicts that Canada’s corporate handheld computer market is expected to see growth of 31% to $154.4 million in 2002 from $118.2 million in 2001, the consumer market will see growth of 9 to 10%, Chaisatien says.

Therefore, Chaisatien advises two distinct marketing plans, one addressing corporate users and one targeting consumers.

‘They should be telling the corporate user to look at (the device) as a business tool that can be integrated with your corporate infrastructure. From a consumer standpoint you need to emphasize any cool applications, like downloading MP3s for example.’ This strategy has indeed been adopted by many manufacturers including Palm.

Albert Daoust, a handheld computer analyst at Toronto-based Evans Research, suggests a simpler approach. ‘Find the one feature that your consumers will like and push the hell out of it. Don’t draw attention to weaknesses or make claims that the consumer knows to be wrong.’

The most recent newcomer to the handheld world, Toshiba made its first foray into the Pocket PC market with the launch in May of its Toshiba e310, which it claims is Canada’s smallest, thinnest and lightest PC.

The launch, which marks the first computing product beyond notebooks to be introduced by Toshiba in Canada in 17 years, was accompanied by a national radio campaign created by Ambrose Carr Linton Carroll in Toronto. The campaign, which targeted mainstream consumers, emphasized features such as its Microsoft Pocket PC operating system which makes it compatible with Windows-based PCs.

‘We believe this is the right time to enter the Pocket PC marketplace because of the tremendous growth in this area,’ says Chris Matto, product manager at Markham, Ont.-based Toshiba Canada.

And as part of a PR initiative to raise awareness of the new model, the e310 (now priced at $649) was distributed two months prior to the launch to 20 people in different industries, ranging from consultants and lawyers to students and music producers.

Benedicta Hughes, marketing communications manager at Toshiba, says that this program had a twofold purpose. ‘It gave us some great feedback about how different people make use of the product in a range of ways, and it also generated editorial coverage through specific case studies,’ she says.

The Japanese electronics giant introduced a second product in this family on June 17. The e740 Pocket PC, which starts at $949 can be used for a variety of functions including additional memory storage and Bluetooth connectivity.

‘The two products are targeting very different consumers,’ says Hughes. ‘While the e310 is ideal for someone who is new to PCs, the e740 is more of an enterprise unit for the corporate user.’ Hughes says the new product has already received a great deal of media coverage although no marketing has yet taken place. A comprehensive advertising plan for both new products is currently being determined.

Chaisatien predicts that Toshiba’s offerings will be well received due to their Microsoft Pocket PC platform, which allows easy integration with office applications like Microsoft Outlook. However, he adds: ‘Toshiba would be better off joining forces with Hewlett-Packard and Compaq, rather than trying to steal market share.’ (Hardware manufacturer Compaq, which recently merged with Hewlett-Packard to form The New HP, also boasts a Microsoft Pocket PC, the iPAQ.)

By contrast, Daoust argues that the merger has created a perfect opportunity for Toshiba to enter the market. ‘One spot on the shelf has gone so there’s a natural place for them to go,’ he says.

Ken Price, director of marketing for The New HP’s personal systems group, agrees that Toshiba will bring added competition to the market, although he is confident that the merged company’s products will retain the leading edge in the Pocket PC industry. ‘Toshiba is offering a lower level of functionality and lower price point and they will have to work hard to build up a franchise for the device, so we’re not quite competing head to head.

‘It will be good for the industry to add another player as it promotes the whole idea of Pocket PCs,’ he adds.

The long-term strategy of the merged company includes phasing out Hewlett-Packard’s Jornada handheld device by the end of this year, Price says, which will allow the company to focus its marketing efforts on Compaq’s more successful iPAQ.

Meanwhile, Price says the company plans to continue with its existing marketing strategies, making use of multi-media advertising, which is primarily wrapped around the banners of The New HP’s retailers including Future Shop and RadioShack. Ahead is more advertising with telecommunications and cable companies. One recent iPAQ H3850 ad ran in conjunction with Bell Mobility, for example, offering purchasers a discount of $219 until June 28.

Price hints that new products launching later this year are likely to include more inbuilt wireless features, to meet consumer demand.

Toshiba and The New HP are among the few manufacturers of Microsoft-operated handhelds to be taking on the slew of lower-priced Palm-operated devices, all of which are supported by their own marketing plans.

In fact, global PDA leader Palm announced in June that it had begun sending a more advanced version of its software to handheld computer makers. It will enable manufacturers to make more advanced hardware and, Palm hopes, squash the advances of Microsoft.

In an effort to maintain its competitive edge, Palm launched two new products of its own in March. The m130 and m515 handhelds both feature bright colour screens. The m130, which is available for $449, targets the price-conscious consumer, those looking to upgrade from the Palm m100 and m105 handhelds. And the m515 at $649 targets busy executives on the go.

The launch was accompanied by national TV spots, aiming to position the devices as the consumer product of choice for business and personal use. And a number of seasonal consumer promotions have since launched. In June a Father’s Day promotion launched in Canada and the U.S., offering a free m105 handheld to consumers who purchase a Palm m500 before July 8. A graduation promo is also currently running to attract the student demo, offering a free expansion card loaded with student-friendly features and games to purchasers of the m125 or m130 models.

‘The goal of these promos is to increase market share by growing the number of users in different market segments,’ says Janet Gillespie, director of marketing at Mississauga-based Palm Canada.

And last month Palm Canada launched its first campaign directly targeting corporations and governments. Three print ads are now running in publications including the Globe and Mail, Computing Canada and Canadian Business magazine. Each ad depicts Palm handhelds being used for different business solutions.

‘Our overall objective here is to change the perception of Palm handhelds in the minds of central decision makers from a consumer PDA brand to one that is focused on providing mobile business solutions,’ says Gillespie. And consumers can expect to see new models coming from Palm in the fall.

Sony also entered the game last October with the launch of its personal entertainment organizer, the CLIÉ, which also uses Palm’s software system. The latest in the CLIÉ family, the $1,000 PEG-NR70V, comes equipped with a built-in digital still camera and MP3 audio play system, which sets it apart from its rivals, according to John McCarter, corporate communications director at Toronto-based Sony of Canada.

An extensive marketing campaign which launched this spring is primarily designed to promote awareness of these add-on features. Full-page colour ads ran in the National Post and Globe and Mail prior to Father’s Day, and further ads will continue to roll out later this year. ‘The digital camera element is emphasized in all our ads as that is a feature that none of our competitors offers,’ says McCarter.

In addition, a video e-mail ad will be sent to consumers on Sony’s database this summer. ‘We will typically be targeting higher-end consumers,’ says McCarter, adding that people who have purchased products such as Sony VAIO PCs and digital cameras in the past are likely to be targeted as potential CLIÉ customers. The target consumer, McCarter says is the affluent, well-educated person, particularly males living in urban centres, often including existing PDA consumers who are looking to upgrade.

And an online cross-promotion ran throughout June, offering a free CLIÉ to purchasers of the Sony PCG-GRX570 VAIO PC. On an ongoing basis, a micro-site runs on the Sony Style site, giving details about the latest products.

New PDAs are expected to launch later this year although McCarter declines to give details. ‘That is the nature of this category,’ he says. ‘You have to be constantly coming up with innovative ideas and new features to grab market share.’

And earlier this year, California-based Handspring launched its own multi-functional Palm-operated device, the Treo 180, which incorporates e-mail, messaging, Web browsing and cellular phone functions. In March Handspring signed a deal with Rogers AT&T Wireless as the exclusive Canadian provider of the Treo.

Meanwhile Waterloo, Ont.-based Research In Motion (RIM) has carved out its own niche with the BlackBerry two-way pager. Although RIM controlled only 3% of the global handheld market for Q1 2002, according to IDC (see table), the manufacturer reported that the BlackBerry accounted for 82% of its quarterly revenue for the fiscal year ending March 2. The wireless device boasts the capacity to keep users continually logged on to their corporate e-mail accounts.

According to Daoust, RIM’s success with the BlackBerry is partly due to the manufacturer’s straightforward marketing approach, targeting the corporate user. ‘They’ve delivered the promise that this is a great e-mail terminal,’ he says. ‘They didn’t make promises that they couldn’t keep.’

And a new Java-based handheld, named the BlackBerry 5810 launched in Canada in April at a cost of $749. It combines the features of the BlackBerry wireless e-mail device with a built-in phone, using the Rogers AT&T Wireless GPRS (General Packet Radio Service) network.

Daoust believes there is room for all of the handheld players, although he warns: ‘The danger comes when manufacturers start lowering prices faster than they want to and bringing out new features faster than they should. If you’re in too much of a hurry to gain market share, you can wind up giving your profit to the consumer.’

Fall TV clips take to the small screen

Fall TV previews could soon be coming straight to your handheld computer.

Broadcast giant NBC plans to deliver video-clip previews of its new fall TV shows to PDA owners through a new deal with San Francisco-based startup multimedia content provider Mazingo Network.

Consumers who download the free software at www.mazingo.net can access three-minute clips of the dramas American Dreams and Boomtown as well as the comedies In-Laws, Hidden Hills and Good Morning Miami.

The privately held Mazingo launched in October 2001 and claims to have developed the first digital rights management technology for video content on PDAs. Its service supports both Pocket PC and Palm OS devices.