According to the study, Palm's market share in Europe slipped from 59.5 percent in the second quarter of 2000 to 32.3 percent in the second quarter of 2001. However, Compaq's market share for its iPAQ handhelds increased from 4.5 percent last year to 30.2 percent this year. Other pocket PC vendors didn't fare nearly as well, with Hewlett-Packard's market share slipping to 6.5 percent this year from 7.9 percent in the same quarter last year. Casio, which had less than a one percent market share last year now has a 3.9 percent market share, according to the study.

Psion handhelds, long popular in Europe, slipped dramatically from an 18.2 percent share last year to an 8.2 percent share this year. Psion recently announced it would stop developing handhelds. Handspring, based on the Palm OS, saw its market share in Europe nearly double from 4.2 percent to 8.2 percent.

Overall, however, sales of handhelds were comparatively slow, with just a 7.1 percent increase in sales for the second quarter of 2001 compared to the same quarter last year. Total sales in Europe for the quarter were 507,419. By comparison, Dataquest says the handheld market in Western Europe grew a total of 123 percent.

"After years of strong growth, the Western European PDA market came to an abrupt hold this quarter," said Thomas Reuner, an analyst with Gartner Dataquest in London. "High inventory levels that characterize a still immature market came back to haunt most vendors. These problems were exacerbated by badly managed product transitions and insecurity about how the wireless future will shape up."

Palm remained the top operating system for handhelds but, like the specific brands, it lost ground to Compaq's onslaught, barely maintaining its lead over Windows CE-based devices.

Source: Gartner Dataquest (July 2001)

The study notes that the handheld market should pick up in the middle of 2002 once next-generation wireless systems are widespread. In addition, the slowed economic climate also hurt the handheld sector, the study said.