Sony Cancels Plans for New PDAs

In another sign that personal digital assistants have lost the buzz they once enjoyed, Sony has decided it will not launch any new Clie PDAs in the U.S. market for the rest of the year.

"Sony continues to view mobile devices as a key pillar to our core business strategy. Presently, Sony is reassessing the direction of the conventional PDA market, and Sony will not introduce any new Clie handheld models in the U.S. this fall. Product development and sales continue for the Japanese market only. Sony is taking this time to examine the conventional PDA business and how it will transition into the future," the company says in a statement released Tuesday.

Sales Slump

Sony shipped just over 100,000 Clie units in the U.S. during the first quarter of 2004, good enough for third place overall according to research from IDC. This was a little less than half of Sony's worldwide shipments in the same period. However, Sony's first-quarter shipments worldwide plunged 49.6 percent as compared to the first quarter of 2003 amid a larger industry decline of 11.7 percent over the same period.

PDA users are increasingly looking to mobile phones and converged smart phone devices when upgrading from their older handhelds, says Alex Slawsby, an analyst with IDC in Framingham, Massachusetts. Voice capability is quickly becoming the must-have application in a handheld device, he says.

Sony has already mapped out a mobile phone strategy through its Sony Ericsson Mobile Communications joint venture, and there was little sign that the Sony Ericsson team collaborated with the Clie team, Slawsby says. Sony Ericsson has made a strong commitment to the Symbian operating system, while the Clie was the highest-profile Palm OS licensee outside of PalmOne.

Additionally, Sony built the Clie brand on the PDA's multimedia features and striking design, rather than communications features such as Wi-Fi chips that were only added in recent models, he says.

"Sony has pushed [the market] in all sorts of directions, but this is not a category that's expanding," Slawsby says. "We don't expect anything to turn this trend around: the mobile phone is of a higher priority [to U.S. users]," he says.

Flooding the Market

Over a three-year period, Sony released about 30 Clie handhelds, says Todd Kort, principal analyst with Gartner in San Jose, California. The plethora of new models flooding the market alienated some customers who didn't want to buy a new handheld because a new and better one would arrive within a few weeks, he says.

Sony's decision has a substantial impact on PalmSource, developer of the Palm OS, Kort says. With Sony's departure from the U.S. market, PalmSource now gets about 90 percent of its business from PalmOne, about eight months after the two companies formally separated in a strategy designed to foster their independence, he says.

"Almost in effect, they're back together again," Kort says.

Sony will continue to honor warranties and support contracts for U.S. customers, a Sony spokesperson says.

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