Digitalwall: PDA in Siege (2) Bottlenecks of the Smart Phone

How many users can we expect for smart phones?

Leading PDA manufacturers know that they must do something to survive, as more and more rivals are coming into the market, which has been saturated for a long time. While Palm was the only heavy-weight player in the past, today almost every major IT manufacturer is making its own Pocket PC.

SONY, which was a supporter of the Palm operating system, announced to pull out of the US market not long ago. There are, of course, other reasons for it, but a simple fact is that the sales of PDA are no longer able to grow as fast as they were.

In the meantime, PDA manufacturers have been trying to re-orientate their business toward the smart phone segment. If you visit the website of Palm, you will find that PDAs with mobile phone functions have become the top priority of their marketing efforts.

It is also a busy place in the smart phone market, with Microsoft (along with many IT manufacturers behind it) and leading mobile phone manufacturers including Nokia and Motorola coming to join the market. In Taiwan, many IT manufacturers make both PDA and smart phones.

The smart phone of Palm looks more like a PDA with an antenna and a keyboard than a mobile phone. That conflict has never been reconciled: a PDA needs a larger screen for displaying information, while a mobile phone needs to be as small as possible to enable easy carrying.

You can get a quick look at the smart phone at: http://www.palmone.com/us/

Despite the fierce battle between the three parties and the steady increase in the smart phone output around the world, actually sales have been limited by a number of bottlenecks. Personally, I even believe that the current good days will come to an end pretty soon.

First, many people don't mind carrying a mobile phone and a PDA simultaneously, as they have different usages. While the screen size of smart phones, which allegedly have combined functions of both appliances, is one factor that makes it impossible to win the favor of both types of users.

To cater for mobile phone users, smart phones of most leading mobile phone manufacturers feature a small screen, resulting in inconvenient use of PDA functions. On the other hand, those of PDA manufacturers have taken a different direction. To enable better viewing, they are often made in too big sizes and turn out to be clumsy mobile phone.

Everybody knows that the most important element of a mobile phone is not its functions, but its appearance. The first thing to address, then, is how to deliver users smart phones, which do not look like a brick and attract the surprised eyes of others. Unfortunately, there has been no answer to it up to now.

Of course, there are people that don't care that much about appearances. For them, if a product could provide the functions of both a mobile phone and a PDA, i.e., if the product has powerful functions and allows making/receiving calls and wireless access to the Internet as a PDA does, what's the fuss about the appearance? The following figure shows the proportion of such users.

We can see clearly what a small group it is. Most smart phone uses are those with experience of using PDA, whose number has grown at a very slow speed during the past years. How many users, then, can we expect for smart phones?

From the above figure we can see that, despite its small market size, the smart phone user has been a target of both PDA and mobile phone manufacturers. For the latter, which have accustomed to catering for the mass market, this small segment could mean additional customers anyhow.

Yet for PDA manufacturers, who have far less customers (than mobile phone manufacturers), smart phone user could mean a great loss if it is pulled away. Therefore, PDA manufacturers' drive in the smart phone market seem to be an offensive strategy for new customers, but in essence, it is a defensive move to prevent the loss of existing customers.

Under the attack from both the handheld PC and smart phone, PDA is loosing ground continuously. Manufacturers that only produce PDAs might start to consider making smart phones or full-functioned handheld PCs (as discussed in previous sections).

For consumers, that means more options of portable devices. In addition to PDA, they can choose handheld PCs or smart phones now. One thing in common, however, is that most users of such kind of products are business people. Only handheld PCs and smart phones have little opportunity of entering the mass consumer market.

The following figure shows the market distribution of the products.

The demands of the business people are very steady, while at the same time this market is being shared by three types of portable devices. It means that each kind of manufacturer could only get a small portion. How can they not be so tired? In addition, PDA is going to face more and more severe and deadly siege. (
2004/08/22 - By Digitalwall.com - Way to
China Internet/Telecom )