Charles Arthur On Technology

'Phones today can make calls, take pictures, enter diary items... Why would anyone buy a handheld computer?'

Sony sent a shudder through the already rather edgy managers at PalmSource, the makers of the Palm operating system, when last week it announced its withdrawal from the European and US PDA (personal digital assistant - handheld computer, to you and me) markets.

Sony sent a shudder through the already rather edgy managers at PalmSource, the makers of the Palm operating system, when last week it announced its withdrawal from the European and US PDA (personal digital assistant - handheld computer, to you and me) markets.

Although the company was at pains to explain that this was a "tactical" withdrawal, the reality is that it doesn't see any growth potential for stand-alone PDAs such as its Clié. Indeed, a report by Canalys, a research company based in London, said that in the first three months of this year Sony shipped just 202,060 Cliés - down 45 per cent on the previous year.

Nor is this particularly cause for celebration by Microsoft, whose PocketPC operating system powers the rivals to Palm, such as HP and Dell. The worldwide PDA market fell by 11 per cent in the first quarter of this year to 2.2 million devices (although, to be fair, in Europe shipments rose by 33 per cent, to 852,000). So while the remaining contestants for PDA sales don't quite look like two bald men fighting over a comb, the figures hardly suggest a hirsute future for the handheld market either.

Compare that with 1998: 1.5 million units sold, and the prediction that by 2003 the market would reach 6.2 million units, having grown by 35 per cent annually, and be worth $5bn worldwide. (It's delightful to go back to market researchers' predictions and see how wrong they were.)

The question is, what's gone wrong with handhelds, given that a few years ago it seemed like the sky was the limit? Two obvious problems spring to mind. One is the limited capabilities of handhelds as a class of device; the other is the rise of their rivals. In the first instance Palm - which at the end of the Nineties had about an 80 per cent market share - didn't develop the Palm OS quickly enough. People wanted better password protection, more functionality, and broader support for different devices and data such as plug-in cards, audio and video. Yes, it has that now, but to make itself ubiquitous, Palm needed such facilities about three years ago.

Indeed, in some areas it's always been behind. When I switched from my ageing Psion to a Palm-powered Handspring in 2000, I was astonished by how many things the Palm OS didn't do that the Psion did. Protecting access to your machine with a password was cumbersome; spreadsheets needed an expensive add-on program; the battery life wasn't great, and if they died, so did your data. Much the same applies for PocketPC devices, which have always had appallingly short battery life, plus an interface that could come from a multi-level video game called Confused User.

But the change that has had a far more deadly effect on the handheld market is the rise of the mobile phone, notably those powered by the Symbian operating system. If you buy a modern Nokia, Ericsson or Sony Ericsson phone, you'll have something that can make phone calls and take pictures, but also lets you take limited notes (using the letter keypad), enter diary items and set reminders, and - of course - keep a huge list of contact names and numbers with organisation names and e-mails. If you want you can even surf the Web and do e-mail. The battery life is 10 days or so, and if it dies your data doesn't. You can password-protect your data. You can also synchronise that data with your computerusing Bluetooth.

Put like that, why would anyone buy a handheld? When I put this point to Ed Colligan, who manages the wireless business unit at PalmOne (which makes Palm hardware) recently he was dismissive. How often, he asked, do you really put appointments into your phone? And would you really do it on a tiny Sony Ericsson phone screen, or a bigger Treo with a proper QWERTY keyboard? After all, the Treo can make phone calls too.

It's a nice argument, but weakened by the fact that I could upgrade to a new mobile for nothing through my operator, whereas the Treo 600 will cost a couple of hundred pounds while not offering that much more functionality - and it doesn't have Bluetooth. Nor does the Blackberry, which I've reviewed here and found to be the best way to access the web and e-mail on the move. In both cases, I think that missing that connection to the computer that tends to be the hub of one's work is an important omission, reinforcing the reality that PDAs have to compromise in a way that mobile phones somehow don't; for if you really want a big screen on a Symbian phone (plus a stylus you can lose) then you could get the Motorola A920, which has a screen, bigger than many Palm-based models.

The signs are in fact that the PDA market is undergoing a complete split, into cheap contact-and-diary machines at the low end, and PDA-phone hybrids such as the Palm Treo at the high end. I suspect that the growth in Europe is coming at the low end, as people discover sub-£100 PDAs from Palm. Sony isn't in much doubt here. "Where we see the potential is more toward multimedia handhelds, including gaming platforms and wireless communicating devices," said a spokesman about the Clié's withdrawal - for at the same time, shipments of Sony Ericsson phones rose 19 per cent, to 260,870 units. And Sony Ericsson is now profitable, while the Clié lost money for Sony.

Does this leave the market open for Microsoft and the PocketPC to steam through? They'll be pushing on an open door - which leads to an abyss. Handhelds are already here, and you use them to make your phone calls. Sony has made the right choice. All one can wonder is whether Palm will manage to join it - or whether it is doomed to be a footnote in history as the company that provided the stand-in handheld device while mobile phones got their act together.

There's one final irony in all this. Psion, which made a wonderful product, abandoned the PDA market in the late Nineties in the face of the transatlantic onslaught from Palm and Microsoft. Instead it turned its mind to an operatiang system for mobile phones. The name? Symbian.

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