Handhelds still seek the killer app

New technologies providing email access could be key to the revival of the PDA market.

Wireless and mobility are low priorities in the corporate arena, causing the number of handheld devices shipped in Europe to drop in the first quarter of 2002, according to a recent study by IDC.

Industry watchers have noticed the drop in sales of personal digital assistants (PDAs), but claim that a number of developments over the next few months could provide good opportunities for resellers.

The market appears worse than it is, according to Chris Jones, senior analyst for mobile devices at Canalys.

"Q1 2001 was the last big quarter where sales were twice those of the year before. Since then, the market has been in decline for three quarters. So, with the next few quarters this year, if you are comparing sales to a weak quarter last year, then growth is more likely," he said.

Jones cited several reasons for last year's slowdown. First, market leader Palm's pre-announcement of its new m500 led consumers to stop buying its existing model.

"Palm had to resort to discounting products, and this had a pretty dramatic effect on the market, with other brands having to match the discounts," said Jones.

Second, another key player, Psion, left the market. Third, there was a transition from Microsoft's Pocket PC operating system (OS) to Pocket PC 2002, launched last October, so vendors were selling stocks of old products until the autumn.

The elusive killer app

The market is now waiting for a killer application to transform PDAs from executive toys to corporate must-haves. Many feel that application will be email.

"Access to email and information, your company's latest price lists, for example, stored beyond the firewall on the corporate server is the only application that could kick-start the market," said Jones.

"Access to email on the move reduces the amount you have to digest when you get back to the office. You can either opt for a handheld with a slot for a Bluetooth card and use it with a phone, or choose an infra-red solution."

'Queue busting' is another killer application, according to A2000, a distributor of mobile products.

Its sister company 1-2-1 Euro Technology completed a project with retailer WH Smith to speed customers through the tills during the busy Christmas period. Roving staff scanned items that customers had selected, and printed out labels for the total purchase.

When the customer got to the till, the transaction was quicker, thanks to the label. Queue busting can also be applied to restaurants and airlines, said A2000's managing director, John Kemp.

"If an airline's check-in took 25 seconds, with roving staff coming up to deal with you, would you fly with another airline where you had to queue? Less time in line means greater customer satisfaction," he said.

Lack of knowledge

One thing that could be holding back resellers is a lack of knowledge about PDAs. Tim Mahne, managing director for Palm UK and Eire, said that educating the channel will be key to Palm's push into SMEs in the UK.

"People don't know what the devices do. We need to get people to understand that they are not just glorified paper-based personal organisers, and that you can use them to check email and store documents," he explained.

"And we must show people that, if you change something on a Word document on your PDA, it will synchronise with the original."

Resellers which are eyeing up the handheld market but feel daunted by new technology could partner with a distributor, such as Hugh Symons Group.

The firm has set up a project called Unity Enterprise, in which it is partnering with Palm, Hewlett Packard (HP) and Toshiba, and software vendors such as iTouch that sell applications for the handheld market.

The forms-based applications can be tailored just as easily to a courier company that needs to keep track of its deliveries, a market research company conducting surveys on the High Street, or service engineers contacting their base to get the next booking.

Hugh Roper, managing director of Hugh Symons Group, said: "We offer training on what the devices are capable of, on GPRS a wireless connection that's always-on for receiving email or browsing, and on applications. We have online tools to help resellers configure a PDA for wireless email or configure a Wap phone for wireless email.

"And because each carrier has a different way of billing and various tariffs, we have a GPRS hotline. It will save the reseller the burden of filling in mobile contracts."

Bundled add-ons

Palm, too, plans to make things easier for resellers over the coming months. It aims to bundle PDAs with pre-configured software, devices to connect to email and airtime from one of the carriers. The package will be sold through Wireless Data Services, part of the Hugh Symons Group.

"It will be an off-the-shelf hosted solution for the SME market to give them an easy start. We want to focus on that market: companies with under 250 staff," said Mahne.

With so many handheld devices on the market, some resellers have said that it can be confusing to know what to sell to what company. But according to Jones, the HP Jornada, which will be phased out by the end of this year, Compaq iPaq and models from Toshiba, Casio, NEC and Fujitsu Siemens are all "much of a muchness".

"They all have the same processor, the same memory and a similar look and feel," he said. "The main difference is their expansion options. Of those that run the Microsoft Pocket PC OS, iPaq is the best selling brand," he explained.

Microsoft may argue the case for standardising on Windows across handhelds, desktops and servers, but Palm is still a compelling device, Jones said.

"Both have pros and cons and it comes down to the choice of the individual," he said. "If you sit a Palm and an iPaq side by side, the iPaq's screen is brighter, with better colours, but this drains battery life.

"If you are using it quite a lot, a Pocket PC will last about a day before you need to recharge, whereas you would maybe get three days out of a Palm."

Deteriorating hardware margins

With hardware margins on the wane, resellers should think about providing services such as pre-loading applications, asset management and helpdesks, according to Kemp.

"Hardware margins are deteriorating rapidly, so services are very important," he maintained. "If we have sold the device, we are the ones who know the serial number, so we can manage an asset register for the customer.

"If someone has broken a unit, we can go to the asset register, see what software was installed and how it was configured, take a blank unit from stock and deliver a replacement."

Kemp added that it was good to increase the dependence of the customer. "It helps retain the customer," he said. "Instead of a reseller delivering 10 separate boxes that the customer has to put together, it's better to put it together so the end user can take it out of the box and get straight up and running."

Roper insisted that that box shifting was on its way out. "Selling just PDAs will not give you a great margin. It's what you can wrap round the sale. You can configure them for wireless email, you could sell Microsoft Exchange Server with them or a GPRS device, such as a Nokia handset," he said.

Future developments that could kick-start the market include the launch, later this summer, of mmO2's XDA, a greatly anticipated smart phone that runs Microsoft Word, Internet Explorer, Excel and Outlook. There is also a relatively new handheld called the Blackberry, from Research In Motion.

It is a black-and-white device that is permanently connected to the corporate server for access to email and appointments through Microsoft Exchange Server or Lotus Domino. Research In Motion sells its handhelds and server software to the corporate market through mmO2 and Vodafone resellers.

Services such as this could encourage IT managers to buy batches of handhelds and standardise on one device.

Steve Muttram, managing director of Portable, which specialises in handhelds, said: "Up until now it has been individual members of staff buying one-off devices in Dixons, plugging them into the network and causing the IT manager grief.

"We will start to see firms splashing out on 200 devices and handing them out. The IT manager wants to take responsibility for the hardware."

Then there is the advance of GPRS. "GPRS is a big opportunity. We are waiting for the simplification of billing and for the cost of subscriptions to come down," said Andy Brown, IDC's research manager for mobile computing.

"Resellers should look at mobility as a key part of what they offer and become mobile specialists. It is an extremely important area that will get customers listening."

SUMMARY

• Sales of handhelds dropped in the last quarter, although this could be due to a 'false market', analysts have claimed.
• The market is still searching for a killer application. Industry watchers have said this is likely to be email accessibility.
• New technology, such as General Packet Radio Service, could kick-start the market.
• Resellers need to encourage corporates to batch-buy, and turn the handheld from toy into tool.