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Filter - Cynthia L. Webb
Sony Hands PDA Market a Defeat

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_____About Filter_____
Filter looks at the day's top technology news through snapshots and analysis of what the world's media outlets are covering. Washingtonpost.com's new Mon.-Fri. feature is penned by technology reporter Cynthia L. Webb. If a technology story breaks, a company falters or triumphs, or there's a new trend in technology, Filter wants you to know about it.

_____Filter Archive_____
Friendster Expands Its Network (washingtonpost.com, Jun 3, 2004)
Biotech: How to Steal a Culture (washingtonpost.com, Jun 1, 2004)
Bush's Silicon Rx (washingtonpost.com, May 28, 2004)
The Penguin That Ate Microsoft (washingtonpost.com, May 27, 2004)
Microsoft Masters the Art of the Cutback (washingtonpost.com, May 26, 2004)
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By Cynthia L. Webb
washingtonpost.com Staff Writer
Wednesday, June 2, 2004; 9:46 AM

This is not the hit that the PDA market was looking for.

Sony Corp. is bowing out of the personal digital assistant business in the United States and Europe in the face of lackluster sales and skyrocketing competition from the communications business's 800-pound gorilla: the cell phone. Sony will keep its toes in the water in Japan, but it's not a sure thing that it will keep the company's PDA efforts afloat.

"As mobile phones bring on board more and more capabilities of the PDA, there is a growing segment of consumers that would just rather buy a phone and only carry one device," IDC analyst Alex Slawsby told Reuters.

The Financial Times said Sony's decision to stop selling the Clie in U.S. and European markets is "the latest indication of the growing challenge from 'smartphones' and ultra-light portable PCs equipped for wireless networking. The Japanese consumer electronics group plans to focus instead on wireless devices that can play films, games and music." USA Today said "Sony's withdrawal from the once-booming market -- which it entered with great fanfare in 2000 -- shows how quickly PDAs are flaming out, technology analysts say. 'It's not really the space that it once was,' says analyst Cindy McCurley with In-Stat/MDR."

The company's "pullout underlines the overall decline of conventional hand-held devices, which typically are used to keep track of contact information and appointments. That market was hit hard by the tech downturn several years ago. Since then, the industry has been battered by the rise of competing devices, including high-end cellphones," The Wall Street Journal reported. "Analysts said the move is a blow for PalmSource Inc., which makes operating systems for hand-held computers and counted Sony as one of its biggest licensees. PalmSource shares declined 12% on the news, trading at $17.84 at 4 p.m. on the Nasdaq Stock Market. Sony's decision was better news for palmOne Inc., which sells competing devices based on PalmSource operating systems. PalmOne's shares traded at $21.45, up 1%, in 4 p.m. Nasdaq trading."
Reuters: Sony To Halt New Clie Sales Outside of Japan
The Financial Times: Sony To Abandon Handheld PCs
USA Today: PDA Sales Slowing PDQ As Cell Phones Add Features
The Wall Street Journal: Sony Puts Its Handhelds On Hold (Subscription required)

Reuters wrote that Sony's move strikes "a blow to PalmSource Inc., whose software powers the devices" and "would decrease the number of new personal digital assistants (PDAs) that need the Palm operating system made by PalmSource, which counts Sony as its second biggest licensee after palmOne Inc." And further proof that cell phones are winning the war: "Sony aims to fill the Clie void with new advanced handsets from Sony Ericsson, its cell phone venture with Sweden's Ericsson, and a new handheld game machine, the PlayStation Portable (PSP). ... Sony plans to stop development and sales of a new Clie after autumn in all regions, except for Japan," the wire service reported.

More details from The Associated Press: Sony yesterday "said it will continue product development and sales in Japan but that its efforts in the United States will end when it sells existing supplies of four Clie models."

Gartner analyst Todd Kort in the AP story "said it was increasingly difficult for the company to continue investing in what was probably a money-losing business. He expects Sony's decision to end sales in the United States will lead to a worldwide withdrawal. 'Rather than pull the rug out in one day, they're going down gently,' said Kort. 'Japan is not a big enough market for them to limp along with.'"

Sony, of course, is spinning the news differently. "The electronics and entertainment giant denied it was abandoning the Clie -- or the 3.5 million customers who bought one -- but Todd Kort, analyst at technology research firm Gartner Inc., said Sony would probably let the device die quietly," The Los Angeles Times reported. "'They wanted to do it gently,' Kort said, noting that the Clie is powered by the Palm operating system licensed by Sunnyvale, Calif.-based PalmSource Inc. 'They have an equity stake in PalmSource and they didn't want to yank the rug from under them all at once.'"
The Associated Press via The Washington Post: Sony To Halt Sales of Clie PDAs In US (Registration required)
The Los Angeles Times: Sony To Unveil No New Clies In US (Registration required)

Sony's Clie PDA line won't be on shelves here "this holiday season, as handheld sales continue to decline and cell phones equipped with cameras and other features catch on with consumers," The Washington Post reported. The article detailed how the handheld market continues to wither. "Sales in the handheld industry have slipped in recent years. At the market's peak in 2001, 6.4 million units were shipped in the United States, according to research firm IDC. In 2003, that number was down to about 5 million. David Linsalata, an analyst with IDC, said that the declining sales are a result of a handheld industry that hasn't figured out how to make products that are indispensable to consumers. ... Instead, cell phone makers have been gaining ground by adding photo, e-mail, calendar and other software to their products. As a result, sales of 'smartphones' edged past handheld sales worldwide for the first time last year, for a total of about 13 million phones last year compared with about 11 million handhelds worldwide."
The Washington Post: Sony Pulling Handheld From U.S. Market (Registration required)

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