Gartner Says First Quarter 2004 Results Show PalmSource and Microsoft in a Virtual Tie for No. 1 Ranking in Worldwide PDA Operating Systems Market.

Business Editors/High-Tech Writers

STAMFORD, Conn.--(BUSINESS WIRE)--April 30, 2004

Worldwide PDA shipments declined 4.6 percent in the first quarter of 2004, but the battle for the PDA operating system market has heated up as PalmSource and Microsoft were in a virtual tie in shipments in the first quarter of 2004, according to preliminary results from Gartner, Inc.

Palm OS shipments declined by 20.7 percent in the first quarter of 2004 compared with the same period last year (see Table 1). Palm OS market share slipped to 40.7 percent, while the Windows CE market share increased to 40.2 percent. Microsoft licensees have been steadily chipping away at the Palm OS lead since 2000, when Microsoft accounted for 11 percent of the PDA market.

"The decline in Palm OS market share in the first quarter of 2004 is not unexpected because many Palm OS users have delayed PDA purchases until they can evaluate PalmSource's upcoming operating system Cobalt," said Todd Kort, principal analyst in Gartner's Computing Platforms Worldwide group. "Palm OS has also been impacted by Microsoft's bundling of Outlook with every Pocket PC, and the preferred status that Microsoft Windows enjoys with enterprise application developers."

Table 1

Preliminary Worldwide PDA Shipment Estimates by Operating System for
1Q04 (Units)

                                         1Q04             1Q03
                                         Market           Market
                                  1Q04   Share     1Q03   Share Growth
Company                        Shipments   (%)   Shipments  (%)    (%)
----------------------------------------------------------------------
Palm OS                       1,113,089   40.7 1,403,418   49.0 -20.7
Windows CE                    1,099,931   40.2 1,051,401   36.7   4.6
Research in Motion              405,000   14.8    89,500    3.1 352.5
Linux                            52,300    1.9    52,967    1.8  -1.3
Others                           64,490    2.4   268,278    9.4 -76.0
Total                         2,734,810  100.0 2,865,564  100.0  -4.6
----------------------------------------------------------------------

Note: Totals include cellular PDAs such as RIM BlackBerry 7230, but
not smartphones. PalmOne results include Handspring PDA shipments.
Source: Gartner Dataquest (April 2004)

Research in Motion experienced the strongest growth among PDA vendors as its shipments increased 352 percent. Its market share jumped to 14.8 percent in the first quarter of 2004, up from 3.1 percent in the first quarter of 2003 (see Table 2).

"In the last nine months there has been tremendous growth in the use of RIM BlackBerry devices. Given the number of e-mail messages sent or received each day by mobile professionals, it makes sense for many of them to have a pocket wireless device that can be used to keep up with e-mail," Kort said. "RIM has begun licensing its technology to Nokia, Siemens, and Motorola for use in mobile phones, as well as to several PDA vendors. This will undoubtedly provide a significant boost to sales of a wide variety of wireless handheld devices beginning in the second half of 2004."

Table 2

Preliminary Worldwide PDA Vendor Unit Shipment Estimates for 1Q04
(Units)

                                         1Q04             1Q03
                                         Market           Market
                                  1Q04   Share    1Q03    Share Growth
Company                        Shipments  (%)   Shipments  (%)    (%)
----------------------------------------------------------------------
PalmOne                         834,738   30.5   933,421   32.6 -10.6
Hewlett-Packard                 579,842   21.2   455,115   15.9  27.4
Research in Motion              405,000   14.8    89,500    3.1 352.5
Sony                            230,666    8.4   376,909   13.2 -38.8
Dell                            163,800    6.0   145,170    5.1  12.8
Others                          520,764   19.0   865,449   30.2 -39.8
Total                         2,734,810  100.0 2,865,564  100.0  -4.6
----------------------------------------------------------------------

Note: Totals include cellular PDAs such as RIM BlackBerry 7230, but
not smartphones. PalmOne results include Handspring PDA shipments.
Source: Gartner Dataquest (April 2004)

On a regional basis, Western Europe exhibited the strongest growth rate, as PDA shipments increased 24 percent in the first quarter. The U.S. PDA market dropped 13 percent. The Asia/Pacific and Japan regions saw PDA shipments decrease 19 percent and 21 percent, respectively. Latin America PDA shipments were up 9 percent from the first quarter of 2003.

Additional information is available in the Gartner Alert "PalmSource, Microsoft Tie for 1Q04 PDA Market Lead." The Alert provides further analysis on the industry trends for the PDA market. This Alert is available on Gartner's Web site at http://www3.gartner.com/DisplayDocument?id=447708&ref=g_search.

About Gartner

Gartner, Inc. (NYSE: IT and ITB) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 10,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Gartner Intelligence, research and events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has 3,700 associates, including more than 1,000 research analysts and consultants, in more than 75 locations worldwide. For more information, visit www.gartner.com.