Sales triple for handheld software

Sales of software for handheld computers tripled in 2001, with games leading the charge, according to a report Thursday from market researcher NPD Intelect.

More than 900,000 copies of programs for handhelds were sold through U.S. retail channels last year, compared with 225,000 in 2000, according to the report.

Revenue growth was more modest, however--from $15 million to $27 million--owing to declining prices. The average selling price for a handheld application dropped to $30, NPD found, compared with $42 a year earlier.

NPD analyst Steve Koenig said falling software prices were partly attributable to dramatic reductions in hardware prices last year.

"Prices for the software have to keep in line with hardware prices," he said. "It wouldn't do to have a lot of this software priced at $50 when the hardware it runs on is going for $299."

Ready availability of free software has also been a factor in keeping prices down. Several free games and applications for Palm handhelds have registered more than 400,000 downloads through CNET's Download.com service. But Koenig said the influence of shareware and freeware will wane as handhelds take on more PC-like roles.

"These kind of little gimmicky utilities are going to fade in importance...as handhelds evolve into pretty powerful platforms," he said.

Programs written for the Palm operating system accounted for 97 percent of all handheld software sales, reflecting Palm's long lead over Microsoft's Pocket PC format, Koenig said.

Games were the most popular category, responsible for more than a third of units sold. Other popular categories included travel software and hobby programs such as wine guides and exercise planners, demonstrating how handhelds are evolving from glorified address books.

"It's really become a direct extension of the PC," Koenig said.