NOTE: I wrote this article almost 16 years ago for the San Jose-Silicon Valley Business Journal Focus section on Consumer Electronics. It’s kind of fun to look back at the reality of how and why the handheld computer market almost tanked completely.
May 4, 1997, 9:00pm PDT
PDAs evolve to avoid infamy as Edsels of the tech world
Daniel J. Holden
Special To The Business Journal
Unfortunately, slick catch phrases and miniaturization alone cannot a market make.
Even as technology rapidly evolves toward a smaller, more mobile form, industry insiders acknowledge that the market for hand-held devices called personal digital assistants is decidedly limited–at least, at current prices.
“Everybody had great hope for the technology early on,” said John Dunkle, an industry analyst and president of Workgroup Strategic Services Inc. of Portsmouth, N.H. “The U.S. Robotics Pilot and Apple Computer Newton were hailed as great new technologies.
“But the reality is that they were just computer systems with limited capabilities, such as e-mail, messaging, scheduling and other simplistic time- organization tasks.”
Mr. Dunkle said some companies, including Fujitsu Personal Systems Inc., adapted by dominating a few niche markets, such as medicine and transportation. Others added performance and functionality in ever-smaller forms.
“Recently, we’ve seen the introduction of the Casio Cassiopeia, the Compaq PC Companion and other systems, all of which I would call a cross between a hybrid PDA and a `low-brid’ PC,” he said. “In addition to providing Internet connectivity, these systems also are evolving into small-scale, limited-functionality portable computers.”
A major contributor to this expanded functionality, said Mr. Dunkle, is these systems’ support of Microsoft Corp.’s new Windows CE operating system.
Windows CE is a scaled-down version of Windows 95 that supports a simplified word-processing program called Pocket Word and a simplified spreadsheet program called Pocket Excel.
Windows CE also allows users to connect the newer devices –which Microsoft and others want to rename “hand-held PCs” to distinguish them from slower-selling PDAs–through a standard interface to a desktop computer.
The desktop PC then automatically copies files from the HPC, converts them to the standard Windows operating environment, and synchronizes schedules and other messages between the two devices.
According to industry sources, the impact of Windows CE has been slight relative to overall computer sales, but significant in terms of the PDA market.
A sales clerk at a major computer superstore confirmed that Windows CE has significantly increased PDA sales at that store.
The key to Windows CE’s success is users’ familiarity with it, he said.
“Windows CE works just like Windows 95. I can pick it up and use it right away without any training,” said the clerk, who requested anonymity. “In fact, of all the PDAs in my display case right now, this is the only one I know how to use. All the rest use proprietary operating systems that you have to sit down and learn. Windows CE just makes life a whole lot easier.”
Still, Mr. Dunkle said the PDA’s high retail price–about $550 to $600–makes it “primarily an elitist type of product, in the hands of executives and professionals with high discretionary budgets who carry them around as much for the status symbol as for real-life use.”
Elitism is not a high priority for Gary Stainthorp, owner of startup MarketNet Solutions, a San Jose-based Internet marketing and direct-response marketing firm.
“I have a very small, very flat Rolodex Datapage that cost $35 and fits into my daytimer. I use it all the time for tracking phone numbers, appointments and general reminders,” said Mr. Stainthorp.
“It would be nice to have a system that provides word processing and e-mail capabilities, particularly when I go on national business trips,” he said. “But if it’s going to cost $600, I might as well get a low-end laptop that has much greater functionality.”
Mr. Stainthorp added that he has seen little in the way of advertising and promotion of PDA systems, which adds to the difficulty of finding a device that works for him.
“I just think they haven’t been very well marketed,” he said.
Mr. Stainthorp is not alone in shunning PDAs. Many users say they prefer laptops to the hand-held devices–not just because of price, but screen size and resolution as well.
As a result, several major PDA vendors, including Toshiba Corp. and IBM, are introducing systems with larger and better screens.
This summer, Hewlett-Packard Co. is expected to introduce a screen that offers 640-pixel resolution on the horizontal axis, though it will still offer just 240 pixels vertically–meaning users will have to make great use of the scroll function.
PDAs–even those with Windows CE–have other problems besides price, screen size and resolution: The e-mail feature does not allow attachments, the devices cannot be wirelessly synchronized with a user’s PC, and there are no standards for encryption of information stored within them.
The recent formation of a Personal Computer and Communications Association subcommittee on hand-held technology may resolve some of these issues, while manufacturers may handle others.
Additional improvements may also be in the works.
For example, Philips Semiconductors recently introduced a PDA with voice-messaging capabilities, and paging technology companies such as Motorola Inc. and General Wireless Communications are developing two-way wireless e-mail and paging capabilities.
PDAs from Hitachi Data Systems, LG Electronics and NEC promise to provide greater processing power and functionality. And industry insiders say prices for the devices will drop as lower-cost Pentium-class microprocessors become available.
Whether these prices drop enough to entice consumers is debatable.
Equally questionable is whether nonprofessional consumers would want to use them.
“If you bring these devices down to a $200 to $300 range, they lose the elitist status,” said Mr. Dunkle. “But will they sell? It depends in part on how you define the PDA.
“If you define it as having Windows CE and a powerful processor, as well as a bigger screen and better communications capabilities, then the answer is yes, it will sell.
“If you define it as a low-end, low-cost Pilot type of product, that market is already well developed.
“If you define it as a scaled-down PC that you can strap on your wrist or put onto the back of a notebook system for go-anywhere, always-on information polling, that market is embryonic; it has yet to be developed,” Mr. Dunkle said.
“I don’t think we have yet seen what the PDA might be capable of, so it still has a lot of potential.”
Daniel J. Holden is a freelance writer based in San Jose.