The last year 2004 can be called a crucial point in the world of handhelds. The time of revolutionary changes, full of surprises for users of mobile devices. Let's look back at the most important events of the last year and evaluate prospects awaiting us in future.

Handhelds, communicators, smart phones, handsets

The first samples of phones with PDA functions appeared rather long ago. It's presently not very easy to tell what serves as a basis: PDA or a phone. The muddle with terms and rapprochement of functions in devices of various classes caused even more confusion in users. What's the difference between a phone and a smart phone, communicator or PDA, if it can store a list of contacts, load, save, and run user programs (written in Java)? The division between the above mentioned classes was drawn by manufacturers artificially. Most likely for marketing purposes. An inexperienced user will choose a device with a higher-sounding title "communicator" instead of a threadbare phone.

There were attempts to introduce various device classifications. However, none of them allows exact functionality characterization. For example, it was suggested to call smart phones such devices, which have an expanded (relative to a regular phone) set of functions and navigation means, but which are not equipped with touch screens. Thus, communicators are handhelds with a touch screen and a built-in long-range mobile communications module.

This division is not always true. Device manufacturers stick to their own classification, calling similar in functionality devices either smartphones or communicators. Sometimes you may come across even such howlers: devices under Microsoft Windows Mobile Smartphone Edition are called communicators (for example, Motorola MPx100).

There were even less successful attempts to create a classification. For example, devices with "phone" keypads and handheld functionality were suggested as smartphones, while the "communicator" title was offered for models with a qwerty-keyboard.

Let's digress from this artificial confusion with titles for a minute and think about the key distinction between a communicator and a handheld. Wireless communications module. But a modern handheld has several such modules! What's so different about a set of chips for GSM operation (CDMA, UMTS, other) from regular Bluetooth, WiFi? Stable operation radius, transfer rate? But 802.11 is essentially different from Bluetooth in this respect as well!

In fact, integration of long-range mobile communications modules is another inevitable step in the evolution of handhelds. This integration will go on for a long period of time as in case of WiFi. Remember, very few models could boast of 802.11 support three years ago. The mobile communications module will become an integral part of handhelds in the same way. There is no sense in calling the appearance of communicators a revolution. It's quite a usual progress. Now wireless interfaces are listed in the following order: IrDA, Bluetooth, WLAN. In the nearest future the first two items may change to GSM, CDMA, or something else.

Let's look at the matter the other way round. The list of contacts, which the first models of mobile handsets lacked, has grown into powerful PIM tools in modern devices. Displays (who remembers single-line twelve-character ones?) can now render 262 thousand colors at 208x320 (and higher). The constant evolution of hardware and software components in mobile handsets will sooner or later result in complete merger of these devices with handhelds.

It'll become impossible to tell a handset from a handheld. Even now it's already difficult to tell to what class a device is closer. For example, RoverPC S2. Its design indicates that this device belongs to handsets. But its "stuffing", OS, software, and functionality clearly define this device as a handheld.

So, how will these "devices of the future" be called? Will manufacturers manage to convince users to call them a different name, or the word "phone", invented long ago, will get another denotation? We cannot give a simple answer so far. But the fact that traditional handhelds without long-range radio interfaces are living the rest of their days on the market is undeniable.

The last statement is well confirmed by facts. Remember the grand success of Blackberry devices from Research in Motion in the USA — for the last quarter their sales volume exceeded that of iPaq handhelds! Moreover, according to Gartner agency, RIM may come to the fore in handheld sales. It can be precluded by active competition offered by Symbian and Windows Mobile Phone Edition devices.

The situation on the Russian market is still more illustrative. According to the SmartMarketing research agency, the market share of Symbian OS devices in the third quarter of 2004 amounted to 53%! But the handheld sales volumes did not go down in absolute terms — the majority of communicator users upgraded to their new devices from regular mobile handsets. There is no exclusion of traditional handheld devices, these products occupy different market segments.

Symbian, Windows, Palm OS, Linux

Mobile software companies also take steps to bring handhelds and mobile handsets together. Symbian made the most noticeable progress in this area. Not the least of the factors is the correct choice of development vector and the support from mobile handsets market giants (Nokia, Motorola). Impressive 53% — the market share of Symbian OS devices — leave Windows Mobile (27%) and Palm OS (19.8%) far behind. But these figures, obtained in Russia by SmartMarketing agency for the third quarter of 2004, do not take into account the traditional handhelds market specifics. We shouldn't expect Symbian invasion to usual devices without keyboards in the nearest future.

Microsoft fans may rejoice at results: sales of handhelds with preinstalled Windows Mobile in 2004 exceeded the indices for Palm-based devices. Not the least of the factors is the launch of WM2003 Second Edition, which entailed the expansion of handhelds with VGA displays. An important role was also played by the aggressive marketing policy of Microsoft. Royalties for the core (Windows CE. NET 4.2 Core) amount only to $3, for the professional version (Windows CE. NET 4.2 Professional) — $15. Versions for nonprofit use can be obtained free of charge.

Toshiba's announcement that it suspended projects on traditional handhelds did not have serious repercussions. Firstly, the market of Windows powered devices has enough competitors — HP, Fujitsu-Siemens, Dell, ASUS. Secondly, the company hasn't offered any worthy models since the launch of Toshiba E800, which was well in advance of its time.

Microsoft marketing specialists marked prospects of the market for devices with expanded communications features very high. "Phone" functionality will become one of the main development vectors for Windows Mobile. Samsung has already presented a prototype of Thor device, operating under MS Smartphone (WM2005 Magneto core). Microsoft and Symbian will soon start breaking lances in a great battle over the communicators market. The marketing machine of the software giant may prove not powerful enough to overcome the competitor, who mobilized the support of Nokia, SonyEricsson, and Motorola. Anyway, regular users will only gain from the future price wars.

Sony withdrawal from the world handheld market had an immediate effect on Palm popularity. The best fish is a sausage, the best Palm is a Sony. Considering that new models on Cobalt OS are delayed, this platform will inevitably lose a share of the market. Palm OS is losing the battle for profits in the hi-end segment, while Treo communicators are advancing with seven-league strides. PalmSource (OS developer) may as well plan to repeat Symbian success. But Palm OS is not actual today as a platform for traditional handhelds. We'll see its gradual decline in 2005: PalmSource is late with its Cobalt, development of the new version — framework over Linux — will take much time.

There are much fewer enthusiasts, who prefer spending much time on configuring a handheld, than users of off-the-shelf tools. Unlike the world of "serious" computers, Linux did not strike root on handhelds. That was due to server orientation of this OS. The situation may change dramatically when PalmSource switches to developing Linux software. But we shouldn't count on that in the nearest future.

Models

Handheld market segmentation is obvious. Devices with VGA-displays compete in the hi end sector: Fujitsu-Siemens Pocket LOOX 720, HP iPaq hx4700, Dell Axim X50v, ASUS MyPal A730W, Sharp Zaurus SL-C860. The first four models offer very similar technical characteristics. For about $650 a user may get a device with Intel XScale PXA27x (520 or 624 MHz), two expansion slots, wireless adapters Bluetooth and WiFi, VGA-display, and OS Windows Mobile 2003 SE. Each model has its own spirit. Dell X50v — Intel 2700G graphics accelerator, ASUS A730W and FS LOOX 720 — USB host with a cable in the bundle, HP iPaq hx4700 and Dell X50v — 624MHz processor.

Sharp model is notable for OS Linux, rather rare in our parts, in other respects its characteristics are inferior to those of its competitors: Intel XScale PXA255 (400 MHz), two expansion slots, Bluetooth for wireless devices and a record-breaking heavy weight for a handheld (250g).

Prices for hi end handhelds are doomed to slow reduction in the nearest future. A price drop is also possible — following Dell's example. But the high cost of components (display, processor, battery) will not allow prices to drop below $450.

PocketPC with qVGA-displays are a step lower: ASUS MyPal A716, Fujitsu-Siemens Pocket LOOX 710, Dell Axim X50, HP iPaq rx3715. Prices for such devices vary around $475. The above mentioned models differ from senior models by their display resolution. Besides, HP (who loves using unusual processors) equipped its rx3715 with a Samsung chip (S3C22440, 400MHz).

Models of this class are under heavy pressure from both VGA devices and inexpensive handhelds. There are two possible turns of events: either the above mentioned devices will remain "lonely rangers", like HP iPaq 5550, or VGA-models will push them down a level.

The sharpest battle for survival goes on in the most crowded sector of "workhorses". This segment offers such popular models as HP iPaq 2210, ASUS MyPal A620BT, Fujitsu-Siemens Pocket Loox 410/420, HP iPaq 4150, Dell Axim X30. palmOne models also pour oil on the flames: Tungsten T5, Tungsten T3. Prices for such devices do not exceed $400.

We shouldn't count on price reductions. Handhelds of this class would rather start a set of features, which had not been available to them before: WiFi module, the second expansion slot, digital camera.

The low end sector holds competition between palmOne models — Zire 72, Tungsten E — and inexpensive handhelds from HP — iPaq 19x0, iPaq rz1710/1715, Low modifications of Dell X30/50 and many other models from less distinguished manufacturers. Confusion can be seen in device characteristics as well as in their prices (180-300 USD).

Prices for models of this class are dictated by the set of components. Total economy has a negative effect on functionality. Initially low prices do not mean price reductions, so low end models will not get any cheaper in the nearest future. They will start additional trash functions instead (e.g. digital camera).

We should specially mention palmOne Zire 21 and 31. The new handhelds can be bought for a funny price — $99 and $160 correspondingly. But their technical features are depressing — you'd better search for a second hand device in this price range.

We are living through interesting times. The Year of our Redemption 2005 promises to be crammed with events. iXBT.com will try to miss none of them.

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