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Device market year in review: Smart phones, BlackBerrys rule

This year convergence ruled in the device market as Treo sales skyrocketed, BlackBerry made the consumer crossover and a slew of handhelds pushed the limits of form and function.

Looking back five years from now, 2004 may not be remembered as a year of fantastic innovation in the mobile device...

realm, but it will be remembered as the year that smart phones became a smart choice for millions of handheld users.

According to data from Stamford, Conn.-based research firm Gartner Inc., smart phones -- PDA-like cell phones with PIM functionality, e-mail, text messaging and often Web browsing -- will be purchased by 16 million people worldwide in 2004, 4 million more than traditional PDAs.

Todd Kort, principal analyst with Gartner Dataquest, said sales of PalmOne Inc.'s Treo 600 currently account for 50% of U.S. smart phone sales. However, the PDA isn't dead just yet, since the Treo is still outsold by Palm's own line of traditional PDAs.

Seeing is believing

Take a virtual tour of the device market in our photo gallery.

"The U.S. still accounts for about half of the 12 million PDAs being sold worldwide," Kort said, "so PDAs are still holding their own."

Michael Gartenberg, vice president and research director with New York-based JupiterResearch, said the Treo's success -- and the likely triumph of its successor, the Treo 650 -- shows that device buyers are longing to exchange their pocket full of gadgets for a single device that can provide wide-ranging functionality.

Also benefiting from this year's smart phone sensation has been Research in Motion Ltd.'s BlackBerry devices. This year the Canadian device maker secured deals with all four major U.S. cellular carriers, which helped BlackBerry sell a projected 2.2 million devices in 2004, according to Gartner.

Kort said they've been popular for years with corporate executives who need access to e-mail while away from the office, but the platform is gaining popularity with sales pros and other mobile workers, as well as consumers, because of its rapidly expanding capabilities.

"They're starting to attract a lot of third-party development, so there's a good collection of apps to add to the device," Kort said. "RIM has been the hottest story this year, and will likely to continue to have strong momentum into 2005."

Much of that momentum is expected to come from new form factors, such as the BlackBerry 7100 series of devices that offer the familiar BlackBerry functionality, but looks and feels more like phones than RIM's previous handsets.

For more information

Check out our 2004 Gadget Guide.

View our best content on the BlackBerry platform.

Still, the future of the BlackBerry could be at risk, as RIM is currently appealing a legal defeat in an ongoing patent infringement case. Holding company NTP argued successfully in 2002 that the BlackBerry violates its wireless e-mail patents. NTP obtained an injunction preventing BlackBerrys from being sold in the U.S., but that injunction has been stayed pending appeal.

A number of other devices made a splash in 2004.

  • Dell Axim X30 -- This traditional PDA features Intel's high-end XScale processors, including 624 MB of RAM, 3.5 inch color displays and optional wireless data features, and a starting price of $199. "The Axim X30 was a breakthrough," Gartenberg said. "It wasn't so much about a unique form factor or new features, but it came with top-of-the-line functionality at a rock-bottom price."

  • Motorola Razr V3 -- Just released last month, the much-hyped device sports Bluetooth connectivity, a digital camera, speakerphone and video playback in a clamshell package that's about a half-inch thick and weights 3.35 ounces. "It's very impressive as a thin phone with a very attractive design," Kort said. "It's a device that's going to attract a lot of attention."
  • Danger Sidekick II --- The latest iteration of the sporty wireless phone and data device is slimmer than the original, and adds a camera and speakerphone functionality. Sidekick offers a synchronization service that lets subscribers share e-mail and photos online or with other devices, but Kort said its potential is limited. "It's so proprietary," he said. "There's no third-party software development for it, so the day you buy the device, that's all it's ever going to be. Business users have no interest in that."

  • Hewlett-Packard iPaq 6300 Series -- While its appearance is akin to a PDA, HP's smart phone offers wireless connectivity via Bluetooth, Wi-Fi and GSM/GPRS. However, with a price of nearly $600, its audience is limited. "It's the ultimate in converged devices, but it's going to be a PDA/data device first," Gartenberg said. "It's not the best PDA or phone, but it's good enough and strikes a good balance between the two."
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