'Smart phones' set to topple Palm Pilots in next two years

Shipments of non-wireless handheld computers, such as Palm Pilots, are expected to slow sharply in western Europe over the next two years, according to specialist IT research company Canalys.

Its report, to be published tomorrow, will show growth in shipments of non-wireless handheld products predicted to fall dramatically from last year's figure of 111 per cent to 48 per cent this year, dropping to 37 per cent by 2003.

Shipments of the handheld devices are still expected to be greater in 2003 than those of other mobile computing devices. However, "smart phones" such as Nokia's 9210 Communicator will present an increasing challenge. Only 231,000 smart phones are expected to be shipped into western Europe this year, but sales are forecast to grow 623 per cent to 1.67 million by the end of 2002.

Shipments of so-called "feature phones", which offer fewer applications than smart phones, are forecast to reach 2 million units by 2003, up 274 per cent from 534,000 in 2002. Canalys predicts shipments of wireless handheld devices will reach 650,000 units by 2003, up from just 60,000 units this year.

Fierce competition in the mobile device sector has already claimed one scalp this month with British technology firm Psion announcing plans to pull out of the consumer handheld computer business to focus on the industrial market.

But manufacturers such as Palm and Handspring are also being challenged by rivals with Microsoft's PocketPC software. "The market will get more saturated," said Canalys analyst Andy Buss. "We've seen that with Palm devices. Smart phones will be competing for the same market as wireless handheld devices. We'll see PC people make devices more like phones, and phone manufacturers make more PC-like products."