iPod Touch is as doomed to oblivion as all the other handhelds

On the news that Palm Inc posted a $9.6 million loss for its second quarter ending November 30, 2007, it probably won’t come as a shock to anyone if I say that the traditional handheld is dying if not dead.

I also include in that statement the Apple iPod Touch which to me is just too similar to the far more usable iPhone.

However, I was shocked when I spoke with Ramon Llamas, IDC research analyst. All I wanted Llamas to do was to confirm my assumption that handhelds are dead but he wouldn’t do that.

“Are handhelds dead or dying?” I asked Llamas.

Neither he said and answered me with what he called a “resounding no.”

But the stats appear on my side.

Shipping numbers for third quarter 07 versus third quarter 06 from IDC show a 39 percent decline in handhelds.

Shipments for second quarter 07 compared to shipments for last quarter are flat.

Here’s the numbers directly from IDC.

Worldwide shipments in Q3 2007: 725,00

Worldwide shipments in Q2 2007: 720,000

Worldwide shipments in Q3 2006: 1,200,00

US shipments in Q3 2007: 295,00; in Q2 07: 280,000; in Q3 2006: 420,000

Despite these numbers Llamas believes consumers and the enterprise are still buying plenty of handhelds and there are companies like HP still introducing new models.

“There are consumers who want the contact list and applications but don’t want to pay out a monthly fee,” Llamas told me.

In addition, we have new handheld models with GPS built in that are attracting a new audience.

And while it is true that Palm hasn’t introduced a new handheld since 2005, the Treo is doing well, according to Llamas.

Yes, this furthers my contention that handhelds–except in vertical applications, especially in the supply chain for companies like FedEx and UPS–are history.

They will be replaced by smart phones in almost every instance.

So where does that leave the Apple iPod Touch?

Here, IDC was no help because they categorize the Touch as a music device not a handheld.

Nevertheless, let me go out on a limb and say the iPod Touch is a handheld–albeit limited to a few applications at the moment but a developer kit is due out along with one for the iPhone–and so it too will go the way of old technology.

One underlying reason for my belief that handhelds will fade out in favor of smart phones is because as the digital divide grows wider, we will see a world where there are those who cannot afford any electronic device on one side and those who say to themselves and friends, “for another $40, $50 or $60 per month I might as well include cellular” on the other side.