August 18, 2003 11:54 AM PDT

Mobile phones move deeper into PDA turf

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The market for mobile phones is increasingly encroaching on the market for handheld organizers, leading to the second straight year of decline in organizer shipments, according to a report from research firm IDC.

So-called "converged" mobile phones, which combine organizer functions with the ability to make phone calls, are taking customers away from the handheld device market, IDC said Monday. For 2003, worldwide shipments are expected to decline 8.4 percent, to 11.35 million units from 12.4 million units last year.

The market for organizers is expected to bounce back in 2004.

"There will always be a market for unconnected devices and we could see a rebound of maybe a million units in 2004 over 2003 shipments, but growth and unit volumes have reached their ceiling," said Kevin Burden, analyst with IDC.

Last year was the first in which the organizer market experienced a decline in shipments. Many organizer companies have been working to add phone capabilities to their devices.

On the flip side, the market for converged mobile devices will see its strongest year of growth in 2003, according to IDC. About 13 million converged devices are expected to ship this year, with volumes expected to grow about 86 percent annually until 2007.

"Many of the negative issues associated with the converged mobile device market have been improved upon," said Burden.

Burden added that devices have become smaller and battery life has improved, but one of the key factors in sales growth has been price. Average prices have fallen low enough to appeal to the mass market, and the price difference between phones with and without organizer capabilities is shrinking, he said.

The average price for a converged device in 2003 is $462, compared with $578 in 2002. The average price for an organizer in 2003 is $296, according to IDC.


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