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PDA Decline is Classic Marketing Case Study

According to IDC's "Worldwide Handheld QView," vendors shipped a total of 720,000 units during the second quarter of 2007, a 43.5 percent decrease from the same quarter one year ago and a 21.8 percent decrease from the previous quarter.

This marked the second consecutive quarter in which total worldwide shipments have not crested above the million unit mark. Following Dell's decision to withdraw from the handheld Pocket PC/PDA device market, other vendors were able to increase their shipments and capture more market share during the 2Q 2007.

Overall, however, the handheld device market experienced year-over-year decline as demand decreased and vendors transitioned their resources towards other product lines.

"The departure of a major player allows other vendors to fill the gap and increase shipments. But the market as a whole is still contracting and other vendors, with fewer resources and less distribution, may be forced to withdraw from the market altogether," says Ramon Llamas, research analyst with IDC's Mobile Devices Technology and Trends team.

With double-digit negative growth continuing to characterize the market, IDC expects the handheld device market to contract further before it reaches a stable point.

"Despite the ongoing decline, there continues to be a small but nonetheless significant demand for these devices," continues Llamas. "To drive ongoing demand, vendors have introduced a number of devices that offer features like multimedia, GPS, and wireless, but not cellular, connectivity. But even the inclusion of these new features have not stemmed the decline in shipments. Stability has yet to arrive."

I believe that the decline of the Pocket PC (PPC) and Personal Digital Assistant (PDA) market overall is a case study that students at business schools will debate for years to come. Moreover, while some analysts will conclude that the market merely reached the point of saturation sooner than anticipated, I would disagree.

This is a classic case of vendors conceding market development to the early adopters, but failing to continue that momentum into the greater mainstream user opportunity. The handheld device market is populated with vendor marketing teams who have failed to engage and develop their loyal customer communities -- a combination of vertical and horizontal niches with common mobile computing and communication needs.

The ecosystem of independent software developers who created the value-added applications for these devices often fueled the ongoing applications that validated the user return on investment. I'm sure that my own experience is typical -- the bundled software that was included with my Pocket PC was minimal, and the vendor's website offered no insight into the evolving support ecosystem.

The process of device application discovery was essentially without any vendor involvement -- if I had not invested the time and effort to seek out the user enthusiast websites and the category evangelist blogs, then I doubt that I would ever have reaped the full benefit from my investment.

Granted, this story is not unique, and it translates across many technology product categories -- customer advocacy and user community nurturing is often placed in the charge of product managers (i.e. product-centric engineers) who lack the required skills to effectively champion the essential role of researching, designing and implementing a comprehensive market development campaign.

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