Nokia leads smartphone vendors

Handheld PC vendors sold four times as many smartphones as PDAs (personal digital assistants) in the first half of 2006, and Nokia Corp. continued to distance itself from competitors.

Nokia owns 42 percent of the combined PDA and smartphone market, compared to single-digit market share for Research in Motion Ltd. (RIM), Motorola Inc. and Palm Inc., according to a study released Thursday by Gartner Inc.

Worldwide, that market reached 42.1 million units, a 57 percent rise from the same period last year. Most of the growth was driven by sales of smartphones, which rose 75.5 percent to 34.7 million units. In contrast, PDAs grew very slowly, climbing only 5.7 percent to 7.4 million units.

Nokia could add to its lead in the second half of 2006 as it launches new models of smartphones, said Roberta Cozza, principal research analyst for Gartner.

Among the smaller vendors, Motorola doubled its sales of smartphones, thanks to the popularity of its Linux-based units in Chinese markets. But RIM is set to post stronger future growth with its Pearl device, as demand for mobile e-mail spreads beyond executive users, Gartner said.

At the bottom of the pile, Palm saw its sales sink 26 percent, leaving it with only 5 percent of the combined worldwide market for PDAs and smartphones. In fact, the company has launched no new PDA models to date in 2006.

PDAs aren’t dead yet — they outsold smartphones in North America in the first half of 2006. But smartphones ruled in every other region, including an enormous 33 percent worldwide share sold in Japan alone.

To continue this hot pace of growth, vendors must convince buyers that new smartphones offer more benefits than less-expensive enhanced cell phones, Cozza said. To make that case, they will launch new products with advanced features and rich multimedia functions, she said. If they succeed, smartphone shipments could reach 81 million by the end of the year.