Breaking Out

PIMs, WIDs, PDAs—call them what you want, but handheld information devices are set to undergo a major boom in corporate sales, as advances in wireless Internet access and next generation telecoms turn what were once little more than executive toys into serious enterprise tools.

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By  Mark Sutton Published  June 26, 2001

I|~||~||~|If you have spent any length of time in IT, you will most likely have noticed one of the surest signs of a technical expert or IT manager is the way they always seem to have a personal data assistant, electronic organiser or some form of handheld device. Long before the mobile phone became commonplace in the shopping mall, techies were beaming business cards to each other and scheduling appointments in electronic diaries, but despite their popularity, these devices have remained the preserve of the IT community.

But things are changing—traditional PC manufacturers like Compaq and HP have muscled into the handheld market, along with upstart mobile manufacturers like Ericsson and Nokia. The devices carry many more features, and more importantly, they are starting to spread, to sales forces, field engineers and even into non-IT environments like hospitals and schools. Corporates are investing in these mobile solutions. The handheld market is coming of age.

The oldest contender, and still the reigning champion (almost) of the handheld market, is Palm. Despite competition from Psion, Handspring and a handful of others, the Palm still holds 70% market share for its viewer (the handset) and 80% for the Palm operating system, that is also used by Handspring, Sony and a few others.

The company was sold off by 3Com last year, but despite its enterprise roots, the brand was not a focus for 3Com, and had usually been handled by 3Com’s normal distributors, who were more interested in modems and networking equipment. The situation means that the majority of Palm’s are sold into the retail channel, although this makes it difficult to tell where the devices end up. “It is difficult to quantify in this market, what [proportion] is enterprise sales, because even if somebody buys a Palm at retail it can be used for work,” said Stuart Maughan, area manager for Palm Middle East & Africa. “Many companies allow them on expenses, so do you classify it as a business or a consumer product?”

The spin off allows Palm to focus more on how it sells to different segments, according to Maughan, although its penetration into the enterprise has been through the side door so far. “What tends to happen is that you have individuals buying them, they synchronise them with their work computers, putting an extra load on their IT departments to support them. Then the IT department starts to ask ‘what are we going to do about it’. Some are happy to leave the individuals to do what they want, others start looking at synchronising through their Internet server, monitoring what applications are downloaded, and then adding things like sales force automation software.”

This organic growth within organisations has led to a small but growing base of corporate users in Europe and the US, Maughan says. For now, Palm has only just opened a Middle East office in Dubai, but as the market develops, he would expect to develop separate channels for retail and enterprise, then enterprise sales managers for different vertical markets.

“In this region, at the moment, it is retail we are focusing on,” he says. “There are companies that are looking for sales force automation, especially where they have large product lists and a large sales force—providing a laptop to a sales person is very expensive—it is a very small market here at the moment, but it tends to grow as the product becomes more and more widely used.”

||**||II|~||~||~|But Palm is not alone in the market anymore. Latest figures from Gartner Dataquest show that Compaq, with its Pocket PC-based iPaq, has taken the lead over Palm in revenue in the US. Palm stays ahead of the more expensive iPaq on units sold, but the enormous success of the latest handhelds running Windows CE 3.0 operating system marks a change in the nature of the handheld market.

The latest devices, namely the iPaq, Hewlett-Packard’s Jornada and Casio’s Cassiopeia, are not the same sort of device as the Palm. Fully Windows compatible, with support for MP3, streaming video, miniature digital cameras, full Internet browsing, wireless networking and most of the features you would expect from a notebook, Pocket PCs are selling well. HP reports revenue growth of 139% from 2000 to 2001, iPaq sales are five times the expected amount and Microsoft says the total number of units running Pocket PC stands at around 1.25 million worldwide, for an operating system that launched less than a year ago.

The roll-out of Pocket PC has tended to focus on the same area as Palm, retail. In order to get the products into the end-user’s awareness, heavy promotion with the region’s larger retailers has been the order of the day. “It is all about awareness,” explained Alya Azar, handheld devices manager for HP Middle Easts’ Consumer Business Organisation. “People don’t know much about the Jornada yet, so the more education, the more advertising and the more instore promotions we do, the more people will understand the benefits. It is not like a printer where people know what it does—the end user has to know what makes it different.”

HP has focused on promotions with the larger retailers, such as Plug-ins, CompuMe, Jarir Bookstores and Multimedia Megastores. Only the shops that know how to sell, can dedicate staff to the product and will do business in large volumes have been chosen, said Graham Porter, marketing manager for HP Middle East. “We cannot support thousands of resellers who sell one or two units a month, we have taken the key retailers—that is where the volume is.”

||**||III|~||~||~|Compaq, like HP, is also relying on retail to launch the product in to the enterprise. “The initial demand is driven by retail, but as the products become more available, we see the demand going through integrated solutions, and non-retail channels,” said Philip Ashkar, sales director for Compaq’s Middle East Access Business Group. “We have been successful with two or three major accounts to drive wireless solutions for sales people. Retail is an ongoing business where we will generate our run rate, but we see our added edge is going to be in the enterprise market.”

Ashkar says that Compaq is aiming for enterprise customers to account for 30% of iPaq’s business by year end. HP expects a split of around 50-50. The interest is in placing corporate solutions though, and to do that primarily relies on one thing—wireless communications. Being able to access corporate data any place, any time, is the selling point here. HP has spoken to Aramco about a solution for field engineers; Compaq, with telecommunications solutions provider Axiom, has produced a sales solution for one of the region’s major pharmaceutical companies.

Aiman Al-Shehabi, director of business development, Axiom Telecom, says that the project shows up the difference between the Pocket PC solutions and Palm. “The requirement was for a sales force of about 150 people, scattered throughout the Middle East, so we equipped their people with an iPaq and a GSM card. They can access the office servers, send files, receive email—they are always connected to the office here, the application we developed is all Web-based. It would have been difficult [with Palm] because of their operating system, you can’t open attachments when you view email,” he said.

Compatibility with Windows applications is major selling point for Pocket PC. Because Palm has been around for so much longer than its rivals, it has built up a base of around 10,000 applications. However, complete Microsoft compatibility with Pocket PC gives it the edge in corporate applications.

Another differentiator is mobile access. Interestingly enough, Compaq, HP and Palm are still working to provide their own GSM units, but third party products, IR and wired networking to mobile phones provide all of the handhelds with some sort of access solution. However, with full email and Web browsing capabilities on Win CE, against limited email and a custom ‘Web-clipping service’, closer to WAP than the Web on the Palm, vendors are pushing Pocket PCs as the more complete Internet solution of the two. “As better wireless messaging capabilities have become available, many enterprises are considering large volume purchases of PDAs,” said Todd Kort, Dataquest analyst. “Palm has little to offer such companies.”

Maughan thinks that the two standards aren’t mutually exclusive though. Although Compaq say otherwise, he believes that Palm hasn’t lost market share to Pocket PC, and all of the vendors agree that they are not competing in exactly the same market space. Palm still has its advantages, says Maughan. Many of the popular office apps have been adapted for Palm, and the device was designed to be a handheld. “The usage model with a Palm is completely different to what the PC manufacturers have done,” he said. “Palm came from designing a handheld, up, whereas the PC manufacturers want as many features as possible, as much memory as possible, faster processing speed. But what you do on your laptop you don’t do on your handheld.
You turn a PC on once day, with a handheld you switch it on maybe 30 times a day, for a very short period of time, you need a usage model to power it up with no waiting time, it has to be faster than doing it on a Filofax or the product is useless.”

Size matters too, says Maughan. “People want the form factor, but the PC manufacturers cannot make them as slim as the Palm. They are nice products, but they are twice the weight—none of these products fit in your pocket unless you want them to pull your trousers down.”

Axiom sells both systems through their stores and wholesale channel, and Al-Shehabi says that he sometimes still uses his Palm—the difference in form factor means there is still a compromise between size and functionality—but convergence in the handheld sector between PDAs, PCs and mobile phones is likely to change that.

“PDAs in general are not just information managers, they are more access devices, everybody is trying to position themselves as an access device,” he said. “We see companies like HP and Compaq that had nothing to communications, companies like Nokia and Ericsson coming up with mobile PDAs—everybody is jumping on everybody else’s turf, there are a lot of people working together—we don’t know where this is going to lead.”

HP has certainly prepared itself for convergence. It has agreements with Microsoft in the handheld market, Nokia for WAP, and even watch manufacturer Swatch, says Porter. He agrees this may seem like an unusual alliance, but HP is looking to take enterprise applications beyond even the handheld. “We have some software called Chi, like an operating system, running on a Swatch, and running on top of that, we have got a version of Oracle 8i. You have an Oracle database on your wrist,” he says. “Now we are looking at connecting this to the Internet. It is all about being able to get information when you want it.”
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