Global: Smart money on the unstoppable phone

The PDA is dead--the smartphone has killed it.

This bald identification of victim and murder weapon by David Levin, chief executive of Symbian, may appear premature. But it is a mantra he has been repeating for years. When he was chief executive of Psion, he took the decision to shut down production of its consumer personal digital assistant--the handheld mini-computer it pioneered--in the belief that a new breed of phones would wipe out its market.

In that context, Psion's sale of its stake in Symbian yesterday is another step in the funeral march of the PDA as we know it.

Nokia can now invest in, and accelerate the development of, Symbian to power its own smartphones as well as those made by Sony-Ericsson, Samsung, Panasonic, Siemens and others. While worldwide PDA shipments totalled 11.5m last year, compared with 6m-7m smartphones, that was a decline of 5.3% on 2002. Smartphones are expected to overtake PDAs in sales this year.

"The mobile phone is a very flexible device and it's fairly straightforward to couple it with some specific products," says Mr Levin.

Phones such as Sony-Ericsson's Symbian-based P900 already combine high-quality cameras, personal information management (PIM) tools, sophisticated games and music players.

"The PDA is just the first segment the phone is going to eat. We see good evidence the same thing is happening in the camera segment and the same will happen in gaming and in music.

"The reason this will happen is that everybody has a phone and the economics of putting a combined product together is cheaper than doing two separate products, particularly when the device is being subsidised by an operator."

Mr Levin's comments are likely to be taken with a pinch of salt by rivals such as Microsoft and Palm. The Symbian operating system, which has more than 95% of the smartphone market, is seen as having an Achilles heel in the enterprise space where PDAs and other companies still hold sway. "The PDA does have an enterprise future, without a doubt," says Brian Gammage, vice-president for client platforms research at Gartner. "There are groups of users that derive real benefit from PDAs, and support on the Microsoft platform in terms of integration with back-end systems is superior due to the legacy it has there in computers."

Microsoft has been touting figures by the Canalys research firm suggesting Hewlett-Packard PDAs running its Windows mobile software had 33% of the European market in the fourth quarter, against 25% for Palm. Microsoft said this represented 190% year-on-year market share growth for its software. However, Microsoft's emphasis on its success in PDAs is understandable, given that it has made little headway against Symbian in the smartphone market.

The figures also highlight difficulties for Palm. It merged with Handspring last year in an attempt to make an impression in the smartphone market as its PDA business waned. It has also split the company in two--palmOne producing devices, and PalmSource developing an operating system that can work in PDAs and smartphones. Its Treo smartphones have been well received but have only a fraction of the market.

Meanwhile, Psion has decided it is not big enough to stand with Nokia against Microsoft and is retiring to its Teklogix business to develop rugged mobile hardware for the enterprise.

Source: Financial Times.