Sony Drops Out of US PDA Market

Yesterday, consumer-electronics giant Sony announced its sudden and unexpected departure from the US PDA market, dropping development of its CLIE product line in the United States for the foreseeable future. Sony's CLIE devices are currently the third best-selling PDAs, behind palmONE's Palm OS-based devices and HP's Pocket PCs.
Sony says that it's "reassessing" its CLIE product line and won't release new CLIE models to the US market this fall; instead, the company will continue to support existing customers and let the existing stock of devices sell out. Although the departure of the number-three PDA maker was unexpected, analysts had already warned that sales of so-called conventional PDAs--those devices that don't include smart phone features--would nosedive in the coming months after experiencing flat sales during the last 2 years. And because Sony makes only conventional PDAs, the company apparently felt it was time to step back and cut its losses.
The move couldn't come at a worse time for PalmSource, which makes the Palm OS that powers Sony's devices. Although market-leader palmONE also uses the OS, devices based on Microsoft's Windows Mobile-based Pocket PC platform have pulled even, overall, with Palm OS devices and are expected to soon surpass Palm OS sales. With a major player such as Sony dropping out of the race, that reversal of market fortunes will no doubt happen even more quickly. However, Sony's exit could bolster palmONE's sales, at least briefly.
Sony entered the PDA market 4 years ago and quickly added multimedia features and a unique software front end to its devices. The company has shipped more than 30 CLIE models over the years and recently began experimenting with innovative high-end devices sporting built-in keyboards. Although a favorite of reviewers, the high-end CLIEs never sold well, largely because of their exorbitant, notebook PC-like prices. Not coincidentally, the best-selling PDAs lately have been low-end models selling in the $100 to $200 range, and Sony hasn't offered a product that competed well in that price range. As a result, Sony's share of the PDA market dropped from 13 percent to 8.4 percent.
Sony was careful to note that it will continue to sell cell phones through its Sony Ericsson division and will continue development of the PSP, a portable PlayStation game system that will ship in Japan late this year. And the company will presumably continue to create conventional PDAs for the gadget-happy Japanese market.

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