Is the Traditional PDA Market Tapped Out?

[Bob Russell]

The time has come for this MobileRead editor to editorialize. On this front page, you see mostly news and technology, but it's good every now and then to take a step back from the technology and share some thoughts and observations. So first a disclaimer... This is just one writer's perspective, and does not necessarily represent the official thoughts and position of MobileRead.com.

I won't supply all the answers, but I will explore some thoughts about two questions that have been nagging me recently about the PDA market:
1) Is the PDA market done expanding and all tapped out?
2) Why are current owners not buying new PDAs fast and furious?

Most people don't buy another PDA every year. Many PDA owners are happy with their current PDA and aren't in the market for a new one. But much more than that, industry experts are saying that sales increases will be small, and all the growth has to come from alternative markets like smart phones. You'd think that traditional PDAs are a thing of the past. Maybe. But maybe not! Here's a few reasons why I am optimistic about the future of the PDA market.

For one thing, PDAs are related not just to smart phones, but to things like handheld gaming. We are witnessing what seems to be early success for the Zodiac, and there's a lot of excitement about upcoming handheld gaming devices from Sony, Nintendo and Nokia. Yet a PDA platform has a great shot at outdoing the big game console makers in the handheld market. Both fit in your hand and carry similar technology. But the PDA will do much more for you than gaming.

PDA owners also don't seem to "get it" for a while either after buying a device. That included me even though I'm a tech lover. Most PDAs are only used as a personal information manager using built-in apps like date book and to do and address book. If anything else, maybe they keep some pictures or ebooks on there also. So there's no incentive to upgrade. But I think it takes time (and tips from web sites or a friend) for the average user to realize all the things they can do with their PDA. Once they discover some new software, though, look out. They're an instant candidate for an upgrade!

There is also a huge battery advantage of a PDA over a laptop. A PDA is not likely to replace the laptop of most users, but it is an alternative. (See Larry Becker's book Lose the Laptop .) As PDAs get more powerful with increased storage and functionality, and maybe even some decent integrated keyboards or voice input, there's no reason to think they can't become a laptop alternative. Many laptop users are just doing document reading, editing and email anyway. A compromise smart phone device is less likely to be adequate for a laptop replacement.

New capabilities will also open the untapped handheld multimedia market. Look at the explosion of iPod. Is a PDA so much different than an iPod? It's basically some software and a hard drive that separates the devices. That difference will fade soon as storage and compression technology improves. Same goes for the new handheld video devices. It won't be long before PDAs can do the job better, while providing much more additional function.

That long-awaited market for downloaded movie rentals may just end up exploding first for PDAs. Small screens means higher compression will be acceptable, and movies will fit on storage cards. But a smartphone screen is likely to be too small. And soon, with a new multimedia PDA in your pocket, you won't have to watch what the airline chooses for you on long flights anymore!

But that's only half of the promised discussion, so to finish things off, let us take a look at why current PDA owners don't upgrade more often.

Is the technology advancing? We can say a definite yes to that question. Any PDA tech geek like myself will gladly tell you the specs are getting better and better, and software improves constantly. Surely, within a year or so of a PDA purchase, one can find a PDA that would be a nice upgrade.

Do people want a new PDA? Surely some don't see a need. But there are a lot of people very anxious to upgrade. Let's face it, every time a great game comes out for OS5, there's a whole lot of OS4.1 users that can't stop thinking about an upgrade! Granted, that's probably more a factor for the fanatic user than the typical PDA buyer on the street, but the point is that there are reasons to upgrade. Yet not too many are buying. What's going on?

Let's take my own situation. I've got a bit of a personal bias against Sony due to their proprietary schemes and minimal support, but my Clie SJ33 is a great PDA. However, it's just not quite enough for me anymore, so I've been evaluating possible upgrades.

At first I just planned to wait for the new Palm Cobalt (OS6) devices. Thing is, I really don't want to wait to buy a new PDA, and I'd like to have an OS5 device with more memory while everything shakes out with Cobalt and the related software upgrades.

So here I am. Squarely in that prime market for PDA sellers. I like power PDAs (higher prices and margins), and I like the newest gadgets, and I get the bug to upgrade every year or so. But, just like most people, I don't. I think I face the same issue as a lot of buyers, so let's take a look at why I'm not buying yet.

I'm a fan of PalmOS, and well-entrenched, so that's basically what I'm looking for. At the time I'm writing this, I could get a Palm Tungsten E for about $200, which isn't the best thing out there, but would keep me plenty happy for a while. A step up from that would be a Tungsten C with WiFi, which in reconditioned condition is not a whole lot more. A new Zodiac1 with 32MB memory, two card slots and a half-VGA screen is only about $300. For a "mere" $400 I could get a Zodiac2 with a whopping 128MB memory. All of these options are in my price range as an aggressive overspender on technology. And I like all three of those devices. So why don't I buy? That's the puzzle that leads me to write this.

But here's the simple fact that no one seems to talk about... a huge portion of your purchase cost goes to accessories. Not just the fun stuff, but really it's for core pieces. Consider that Tungsten E, with what I consider essentials. In other words, if I don't get those accessories, I don't know if I want the PDA.

Here's my basic shopping list if I decide to buy:

$200 -- Tungsten E
$40 -- Case
$40 -- Cradle and cables (I use my PDA at two computers)
$50 -- Storage card
$20 -- Card Reader or software to mount the card as a directory on my PC
$20 -- Backup software
$20 -- Screen protector
$ 0 -- Assumes I use freeware or software I've already bought (not likely!)
====
$390 for a PDA that is basically just something to carry me until something really nice hits the market.

If I go the Zodiac2 route, which gets me something I really like, the bill goes up to $590 and most likely, by the end of this year or first half of next year, there's going to be something out there that I "have to have" because it blows this one away.

Interesting note: I probably would have gone out and bought a Zodiac2 this morning at my local CompUSA despite the high price tag because I am so eager to upgrade. It would have been a well thought-out impulse buy. But I decided against it when I realized that, according to their web site, CompUSA doesn't carry screen protectors for the Zodiac. After beating up my Clie screen, I won't use a PDA without a screen protector. Especially an expensive new one! And what kind of impulse buyer is going to buy a brand new PDA when they have to wait a week to get a mail-order screen protector before they're willing to use it? Hint to CompUSA and TapWave -- carry ALL the essentials IN STOCK!!!!

Now how many people are going to shell out that kind of money to upgrade every year? Not many. I'll buy either one of those, including accessories, if it's going to satisfy me for a couple years, but if it's just to carry me over to the devices already on the horizon... I don't think so!

And the funny thing is that the PDA maker probably wouldn't get too much of my accessory money anyway unless they had it available at the store when I make my purchase. Ebay and mail order are just too easy and selection is better.

Now you may be asking yourself, "Why didn't you just buy a Zodiac2 when it first came out instead of waiting?" Well, that's a good question. I was still thrilled with my SJ33 for one thing, so it never occurred to me. Another reason it never occurred to me was that I didn't pay any attention to the Zodiac because I thought it was just a toy, and I didn't realize until recently that it was a well-designed and powerful PDA.

So it's no wonder people aren't buying PDAs very often. For that kind of money, they probably want to take their family on a vacation instead!

[Brian]

BobR,

Great article!

Grab a Zodiac and a package of Fellowes WriteRight Screen protectors for the NX series from CompUSA. Although the website says they're out of stock, you should be able to find them in the clearance bin for under $6. They will fit almost perfectly, being slightly undersized in their width (in portrait mode, and only about 1 or 2mm). The most important part of your screen to protect, the VG area, will be well covered if applied properly.

That will allow your prized new Zodiac's screen to remain pristine while you order Martin Fields Overlays, which are among the best screen protectors around.

I had a few spare WriteRights for my former device, a Clie NX70V, so that's exactly what I did while I waited for my Martin Field's Overlays to arrive.

[Laurens]

Originally Posted by BobR

So it's no wonder people aren't buying PDAs very often. For that kind of money, they probably want to take their family on a vacation instead!

You hit the nail on the head here. The reason there is little or no growth in the PDA market is because people don't upgrade them as often as, say, their cellphones. (Which you usually get for "free", combined with some subscription plan.)

That said, I am worried about PalmOne's lack of build quality. Just look at all the negative reviews about the T|E on Amazon. I have a Zire72 myself, but, all things considered, I wouldn't have bought it if I'd known about its flaws. (The rubber paint peeling off being the most glaring error. I'm embarrassed when I show it to people.) By extension, I am worried about the future of PalmOS, as PalmOne is the only really big player left.

Combine that with the non-availability of OS6 devices as of yet and the fact that OS5 is going to be around for much longer and I'm seriously beginning to doubt whether PalmOS has a long-term future. There is little incentive for developers to support OS6-specific features until these devices start selling in significant numbers, which might not happen for the forseeable future as new OS5 devices (SmartPhones) will continue to be released. Hopefully, I will be proven completely wrong, but the fact remains that HP is gaining on PalmOne. Their European sales over Q2 2004 outnumbered those of PalmOne.

[Bob Russell]

I share your concerns, Laurens. Those are some good points. PalmOne to some extent carries with it the success of failure of PalmOS. I'm sure the folks at PalmSource are on the edge of their seat as they watch to see how well PalmOne handles the future.

There are some encouraging signs, however:
1) PalmOS has a large enough market, and is a good enough product that it may have a viable future even if PalmOne fails to capture market with good products.
2) PalmOne knows they have had some quality issues and has worked hard to revitalize their supplier network to improve quality in future products. They may have already put the worst behind them.
3) The Treo line is positioned to get the bulk of the PalmOne product development resources in the near future, and that market may carry them for a while.
4) Unless there are problems we don't know about, it is reasonable to expect the new wave of PalmOne traditional PDA products sometime in the next 6 months. They have said they are continuing work on both the Zire and Tungsten products.
5) We might see new groundbreaking technologies such as micro hard drives in some of the newer models. If not in this upcoming set of products, something coming after that.
6) Other companies like Tapwave will help to bolster product quality due to competition in the market.

With some of those positive tidbits, I'm optimistic about the near-term future of PalmOS. I believe that, while PalmOne traditional PDA product lines may seem like one step behind in technology and features, they are a solid company and will provide solid products. Surely anything significant the PPC world comes up with will be eventually supported by PalmSource/PalmOne.

And as a fan of PalmOS, I sure hope to see them succeed!

[Alexander Turcic]

It's funny, I also question the potential of a future PDA market, but from a slighty different angle.

In the past, my PDA was everything to me:
1) a contact manager;
2) a date organizer;
3) a gameboy-supplement;
4) an e-book reader; and
5) an (offline) web browser.

And I still love my PDA.

But I must admit that I don't use it that often anymore. Here is why:
1) my smartphone now satifies my PDA needs for a good contact manager;
2) see 1)
3) ok, I am still addicted to playing Bejeweled!
4) I am longing for a dedicated e-book reader a la the Librie, but without DRM restrictions - so until then, reading e-books is still what I use my PDA most for;
5) since I still have one of the old-generation PDAs without WiFi capability, I cannot enjoy surfing the Net in my palm. And since I just acquired a new notebook with a wonderful battery longetivity (Intel Centrino) and built-in WiFi, I am spending more time reading RSS feeds nowadays than reading web pages in offline mode on my PDA.

For all my needs I think I won't buy a new PDA any time soon. Perhaps when there will be an alternative to the Sony Librie on the market (with the same or equivalent to Eink technology), I will invest again. But why should I invest in a PDA now, if it still suffers from the same short-comings: small LCD screen & a short battery life?

[scstraus]

This article expresses most of my feelings about the modern handheld market. Right now I find myself part of a small minority in that I own a treo 600 smartphone AND a tapwave zodiac. The reason for that being, one is a great phone, the other is a great entertainment device. Both are great pda's.

Non smartphone PDA's will definately evolve into jack of all trade entertainment devices, and I am not upgrading my zodiac until someone offers one with a hard drive and 3d graphics chip. But when they do, I will be more than happy to upgrade. I don't think it will be more than a couple years before this type of device is on the market.

Having a device for a small pc with email, documents, games, ebooks, movies, and MP3's, and a camera makes a lot of sense for people with mobile entertainment needs, and right now the zodiac does most of that pretty well. A hard drive and nvidia chip would seal the deal on this type of jack of all trades device. Add on keyboards are always a nice addition too.

Well written. You are one of the first to realize this new trend. Now for the PDA developers to figure it out before sony or nintendo does.

[gadgetguru]

Most people who wants a PDA already has one. And unless a new 'killer' app surface, standalone PDAs has reach what most people want it to do. It's also no longer the 'in' thing - that status is now occupied by the iPod. Sure, in time PDA will surpass iPod as a music device, it will be able to do video, to boot....but that time has not arrived yet. An ipod has a superior interface and it can play music for 8-12 hours...something no PDA could unless you use one of those bulky extended battery packs. Video on PDAs is a joke, who would want to watch the latest blockbuster on a tiny screen...short films yes, but full-length movies, the time needed to convert it is horrendous and not worth it.

A seamless Wifi package and a 800x600 browser might just compel people to upgrade. 640x480 is good but people would need a little more than that to convince to shell out $500-600 needed for a new device.

Or maybe there's just too many new gadgets to satisfy the gadget freaks (the hard core people who typically upgrade whenever new devices arrives)... DVD player, Plasma televisions, iPods, new phones, digital cameras... there's just too many ways to spend our hard earned cash...

Phones, has many reason why it keep growing...there's carrier subsidy, and there's also a major reason to upgrade. First it was analog to digital, then clunky phones to svelte small phones, then from voice-centric phones to SMS capable phones, then to GPRS capable phones, then color screens, now it's camera-equipped phones, then smartphones. If you upgrade through the whole cycle, you would have seven phones.

PDA has largely been the same since sometime ago. Adding maybe wireless connectivity and maybe a better interface and nothing much more. THe h3950 could still do most that a new ipaq could. same with Palmone, what does the T3 has that isn't around when the NR70 arrives... bluetooth? ARM processor? Not worth upgrading for me, the NR70V tablet is better than T3 slider design and you get a camera to boot. Sure, T3 is speedier and has more RAM, but 90% don't require those anyway or don't even know about it....

[Brian]

Originally Posted by gadgetguru

Video on PDAs is a joke, who would want to watch the latest blockbuster on a tiny screen...short films yes, but full-length movies, the time needed to convert it is horrendous and not worth it.

I agree with you and ripping movies from DVD and re-encoding is a cumbersome and time consuming process. Tapwave recently told attendees at the New England Palm Users Group Meeting they are exploring alternatives including better compression and the possibility of offering Zodiac-optimized content. Whether it will take the form of a download service for short films, TV shows and movies or availability on secure SD/MMC remains to be seen. The Tapwave VP of Worldwide Sales, David Wenning also stated that compression is under development has is capable of fitting a viewable feature length movie onto a 128MB memory card. He also said content will drive the Zodiac. I co-wrote (I'm and "Staff" writer) an in depth article about the NEPUG meeting over at Tapland that you may find interesting (shameless plug).

I'd personally be interested in buying episodes of my favorite shows like "The Family Guy" pre-packaged on a memory card at a reasonable price through a retail brick and mortar store. Watching this type of content (20-30 minutes at a time) makes more sense to me: Less eye strain and less battery drain than a feature length movie. Unless you're on a flight or have a lengthy rail commute, I don't see a huge demand for full length movies on a portable entertainment device like my Zodiac. TV shows and short films like the BMW series "The Hire" are probably where the biggest demand will be.

[jkendrick]

Nice article and a subject that's somewhat of a pet peeve with me. I've recently written articles about the stagnant mobile device market on Lockergnome and my web site. I believe it comes down to advertising by the big OEMs, or lack thereof, to be precise. These OEMs never advertise the capabilities of their mobile devices and actually show the consumer who doesn't currently own a PDA just how much they can do with it. When's the last time you saw a TV commercial or a magazine ad in a mainstream publication (not a computer magazine or show) that's directed at this untapped market? It's as if the HPs, Toshibas, etc., are content to sell upgrades to their existing market.

How many times as an enthusiast have you heard someone who's looking at your device say "I didn't know you could do that"? How many units can these companies expect to sell if we're doing all their marketing for them?

[Brian]

I think another possible explaination is what we're seeing in the smartphone vs PDA market. Recent sales data suggests that PDA sales are relatively flat while smartphones are increasing in popularity. Why?

PDAs that lack wireless connectivity are information islands. Wireless network connectivity is the future. Reed's Law (the assertion of David P. Reed that the utility of large networks, particularly social networks, can scale exponentially with the size of the network) and Metcalfe's Law (Metcalfe's law explains many of the network effects of communication technologies and networks such as the Internet and World Wide Web) are theories that support this assertion. We are social creatures after all, and how we use technology on a network to communicate and interact will determine the type of devices we will use in the future as wireless connectivity become ubiquitous. Reed's and Metcalfe's Laws will dictate the growth and ubiquity of mobile connectivity. PDAs and other portable information and entertainment devices that lack wireless connectivity are destined for extinction.

For an interesting read on the subject, check out Smart Mobs: The Next Social Revolution by Howard Rheingold.

[radleyp]

You talk about what PDA's can do and that most users ignore, and then don't tell us what that is. I use my TungstenT3 as a,
1) checkbook and money manager (SplashMoney)
2) a star chart (2Sky)
3) a restaurant guide (Zagat)
4) a bus/subway guide (Metro)
5) a map guide (Mapopolis)
6) a reader (Ereader, Plucker)
7) a dictionary (BDicty, Paragon, Ereader)
8) a photo album (SplashPhoto)

... and many other things, in addition to the basic PIM functions. In addition, I use it as a web browser (via bluetooth with my Nokia 6820 phone), and I am surprised that the web access is not as slow as I feared it would be.

I do not like smartphones, whose bulk make them awkward to use as phones.

And I am not in the market for a change (I kept my Sony 615 for 2 and a half years!), because this setup does what I need. No phone today could do what I do with a PDA.

Cheers, Philippe Radley

[doctorow]

Philippe,
I think it is great that you have so many uses for your PDA - my usage list looks almost the same!

But I am afraid that we resemble a minority of geeks here, who want to get every last bit out of a PDA. I've heard market analysts saying that one of the reasons why the Sony Clie has 'failed' in the US market recently was that it became too complex for the average business user. I know that sounds crazy, for I know my PDA by heart and have probably already tried every hack and tweak possible, but I can also imagine that someone like my father might have difficulty to fully grasp a PDA's functionality.

[Colin Dunstan]

I agree. Those of us in the enthusiast community forget how insular our outlook really is. We assume that whiz-bang technology is for everyone; the only problem is that most people who buy it don't know how to use even half of it.

[brahamt]

Great Job BobR!!!!

Loved the article; it was a wonderful read.

[Colin Dunstan]

I think we should give Bob some extra points for his thoughts! Just click on 'Karma' next to Bob's posting.