Sony Corp said it will stop selling new handheld digital assistants outside of Japan this year, exiting a declining market and striking a blow to PalmSource Inc, whose software powers the devices.
The move, announced on Tuesday in the US, 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.
PalmSource shares tumbled 12 percent on Tuesday in New York and Sony shares fell about one percent on Wednesday.
The Japanese electronics and entertainment conglomerate said the Clie failed to realise its intended goal of becoming a mobile device that links content and hardware.
"We consider mobile devices a key aspect of our strategy to converge contents like music, movies and games with hardware and since the Clie functions as a personal organiser, we wanted to refocus our efforts," a Sony spokeswoman said.
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).
The PSP promises to play games, movies and music and will hit stores later this year in Japan. It goes on sale in the United States and Europe by the end of March 2005.
Sony plans to stop development and sales of a new Clie after autumn in all regions, except for Japan.
Sony's Information and Communications business - responsible for Clie and Sony Ericsson - generated sales of 842 billion yen, or 11 percent of group revenues, and had an operating profit of 900 million yen in the business year ended March 31.
Sony chose to scale back its PDA development rather than introduce new products that might have conflicted with more popular products from Sony Ericsson, analysts said.
The absence of Sony's Clie could dent PalmSources's dominance in the handheld software market, where it has so far fended off the competing Pocket PC operating system developed by Microsoft Corp "(Sony's absence) will contribute to a significant loss in the market share of the Palm operating system overall," IDC analyst Alex Slawsby said. "It is a large loss of shipments".
In the late 1990's, handheld computers were a must-have electronics gadget, giving consumers the power to carry thousands of phone numbers, addresses and appointments in their pocket.
"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," Slawsby said.
PalmSource said it had "respect" for Sony's decision. It noted that while the PDA market is declining, PalmSource software is found in popular "smartphone" devices made by manufacturers such as palmOne and Samsung Electronics Co Ltd.
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