Death of a Pilot

For a market pioneer, the PDA is no more.

Tim Beyers
Tim Beyers
May 24, 2007 at 12:00AM

How far Palm (NASDAQ:PALM) has fallen. Once a dominant supplier of personal digital assistants (PDAs), researcher Gartner says that Palm is no longer even among the top five.

How sad. I'm one of those old-school tech guys who bought a PalmPilot in 1996. They were all the rage in Silicon Valley at the time, and Palm was a media darling for finally creating an affordable and easy-to-use PDA.

Fast-forward a decade. Though PDA shipments grew by 40% in the first quarter, Research In Motion (NASDAQ:RIMM) is now the leader, with 18.1% of the market. Mio Technology was second with 11.1%, Samsung third with 8.8%, Sharp fourth with 8.5%, and Nokia (NYSE:NOK) fifth with 6.2%.

The once-proud Palm operating system is suffering, too. According to Gartner, Microsoft (NASDAQ:MSFT) now claims a 62.1% share of the market for handheld operating systems. Palm ranks third, well behind second-place RIM.

Should investors be nervous? Palm, which launched its last handheld in 2005, says no (of course). I respectfully disagree.

Still, management has an argument. The Treo line of smartphones experienced 23% revenue growth during the third quarter and accounted for 86% of gross sales. What's more, the Treo has fan sites all over the Web, such as

But Palm's fan base appears to be fading. According to press reports, the company sold just 5.5% of the world's smartphones last year -- down substantially from 9.2% the year before. You know what that means. Whatever advantage the Treo once had is fading, and fast.

And now, with the demise of the handheld business, there's no competitive advantage left. Just hope, and memories of glory embodied in an aging PalmPilot who's long since been grounded. God speed, Palm investors.

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Fool contributor Tim Beyers, ranked 5,881 out of more than 29,200 in CAPS, owns a Treo 600. He's old school that way. Tim owned shares of Nokia at the time of publication. Tim's portfolio holdings can be found at his Fool profile. His thoughts on Foolishness and investing may be found in his blog. The Motley Fool's disclosure policy was flying back from vacation in Sun Valley at the time of this report. Leave a message and it will get back to you.