As had been speculated since the beginning of the year, Palm’s journey as an independent company ended last month with an acquisition announcement by HP. Palm was the trailblazer in the handheld PC market with its Palm Pilot line of devices, and then the smartphone market with it Palm Treo devices. While the company lost its lead in those areas, as recent as early 2009, it still had the opportunity to recapture its former glory.
To understand Palm’s fate and why it ended up where it did, one need only look at Motorola to see what Palm should have done. Motorola fell into the same trap as Palm by resting on the success of its RAZR line of phones. Just as Palm was the king of the smartphone market in 2005, Motorola was at the top of the cellphone market with the RAZR. Motorola found itself in the same position as Palm in early 2009. It needed to redefine itself to recapture market momentum.
How did Motorola recapture glory with the Droid, while Palm could not do the same with the Pre?
1. Partner selection
Motorola forged a partnership with the #1 carrier in the US – Verizon. Verizon was in dire need of a device to compete with AT&T and the iPhone. It had the desire and poured all the necessary resources into a $100M+ ad campaing supporting the Droid.
By contrast, Palm chose an exclusive relationship with Sprint, the #3 carrier in the US that was losing subscribers to both Verizon and AT&T at a rapid rate. Sprint was anxious to stem its subscriber losses and figured the Pre could do the trick. Unfortunately, Sprint did not have the resources to launch a significant ad campaign in support of the Pre, so Palm was left on its own to promote the device.
The result: Motorola’s launch was a huge success which continues today, while the Pre launch was a dud and never recovered.
The Droid ads were edgy and defining. Verizon made no bones about going directly after the iPhone with its ads and positioning the Droid as a device that could not only hold its own against the iPhone, but in many cases surpass it. In effect, the Droid ads turned the device into a must have for Verizon users.
Palm’s advertising strategy for the Palm was confusing, to say the least. There did not appear to be any strategy or clarity of messaging, and, worse yet, the commercials were even painful to watch in most cases. An example from each ad campaign shows just how different the two approaches were.
Perhaps Palm’s biggest downfall was focusing on both the hardware and the software for the Pre. Many technology pundits argue to this day that WebOS is the best smartphone operating system on the market, but by owning both the software and hardware, Palm spread itself too thin. Perhaps it was John Rubinstein’s Apple roots that led him to believe that he could follow the Apple model, but Palm did not have the resources to continue to innovate on the hardware and software, while at the same time courting developers and building an ecosystem around webOS.
Motorola, on the other hand, focused exclusively on the hardware and leveraged the developing ecosystem around the Android OS. The leverage for Motorola was that it did not have to worry about developing and nurturing the Android ecosystem, Google did it for them. By freeing up resources, Motorola was able to focus solely on the hardware and has been able to continue innovating on the hardware beyond the Droid, while Palm has seemingly been at a standstill since the launch of the Pre.
In retrospect, Palm recognizes that it made fatal mistakes in how it handled the Pre launch – Jon Rubinstein admitted as much in an interview with Fortune a few weeks before the HP acquisition. Unfortunately, as my high school class motto stated, “Life can only be understood backwards, but it must be lived forwards.”
According to numerous internet reports this week, beleagured handset manufaturer Palm is up for sale. The sale of Palm brings back memories of my first experience with their devices, the precursor to the modern day smartphone, that I’d like to share.
Fresh out of school in the early nineties, my employer indoctrinated me into the world of the Franklin Planning system to help me keep my days organized. The system was simple yet brilliant. For those not familiar, an open planner had one page with a calendar, daily schedule, and a to-do list, and the facing page was lined and ready for notes from your events, tasks, and meetings of the day.
I started each morning with 15 minutes of Planning & Solitude where I would laboriously transfer my unfunished to-do tasks and review notes from the prior day, and then plan out my current one. The planner was such an essential part of the company culture I worked in that Franklin classes were given on a regular basis and new employees were given Franklin planner kits.
But then, in 1997, everything changed….
What is that thing?
At the end of an unfinished product development meeting, we needed to schedule a follow-on. As I opened my planner to find open slots in my schedule, the Director of our software group pulled out a little handheld device that grabbed everyone’s attention, the Palm Pilot.
He fascinated us with the functionality of his new toy, but we were skeptical of its claimed capabilities. Empty promises from other failed handheld PDA efforts like the Apple Lisa were fresh in our minds, so no one was quick to give up our day planners. I, for one, could not see how this new breed of gadget could supplant the planning system that had been engrained into my way of working for the last 6 years.
My first boss, Jim, was the poster child for Franklin Planning. He kept copious notes, often written in 3-point font on the pages of his planner. He could locate notes from meetings that took place years in the past and kept a wealth of information in tabs through the back of his planner that he could reference at the drop of a hat.
As Jim and I clung to our planners, we watched around us as more and more of our colleagues adopted the Palm PDAs and touted its virtues. No matter how many times people showed us the device and its capabilities, we were convinced that our planners were the gold standard for organization. These Palms would never become powerful enough to replace the information we could store and collect in our trusty planners. We laughed at those who abandoned the traditional planner for what we considered “fool’s gold.”
And then it happened.
I can still remember that day in late 1999 when Jim walked into my office with the Palm Vx. Like seeing an ex-girlfriend show up at a party with her new date, that feeling of betrayal that you know you shouldn’t feel washed over me. I should have known that one of us would succumb to the lure of the Palm Pilot. It’s attraction had become too great, and now, instead of the gadget handlers being the outcasts, we, the planner hold-outs, had become the ridiculed.
I had held out for 3 years, but it was clear that the time had come to make the transition. As the decade of the nineties came to a close, I, too, decided it was time to convert and purchased the Palm Vx.
Love at first sight
The memories of opening the box, installing the software, and performing the first HotSync still linger in the back of my mind. The device had a look and feel that was as elegant as it was simple. While expansive, the functionality of the device was easy to master. Even learning a new alphabet called graffiti was accomplished in a matter of days, if not hours.
It was exciting to move to the new way of planning and to experience what so many people before me already had – the freedom to leave that bulky planner behind and to use that wonderful piece of plastic, brushed metal and glass to peruse your calendar, take notes, and manage those pesky to-do lists. Yes, those to-do lists. No longer did unfinished tasks need to be transferred day-to-day, they automatically rolled over. What a concept!
In addition to the basics, there were also all the fun pieces. I survived so many meetings sitting in the back playing a good game of Giraffe, the graffiti challenge game were you had to create the letters before they hit the bottom of the screen, or the silly puzzle game where you had to order the numbered tiles from 1-15. When you had your PDA open and were tapping the screen during a meeting, no one could tell if you were taking notes or trying to keep busy for fear of dozing off.
Even with all that functionality, it was the United flight schedule application that made the device truly indispensable for me. I traveled alot, and I mean alot, back in those days, and primarily with United. They had an app that you could download to your device, and then update every few months with their latest flight timetables. I can’t recall the exact number of times that app saved my bacon by finding alternate flights when meetings were canceled or ran over, or when I was stuck in Chicago during one of the numerous thunderstorms or snowstorms that fell upon O’Hare, but lets just say it was a lot.
There’s got to be more to life
As much as I had become attached to my Palm, I came to realize that I needed more. By 2005, carrying a PDA and phone was getting annoying. The time had come to find a device that could combine the two. While Palm was trying to lead the market with their Palm Treo line of devices, their PDA heritage weighed them down. They continued to overinvest in the ever rapidly declining stand alone PDA market at the expense of their smartphones. Upstarts like RIM, who did not have a PDA history, entered the market and quickly surpassed Palm. By 2006, Palm began to lose its mojo, which, unfortunately, it has never regained.
No matter who acquires Palm, it will mark the end of an era. Just as we watch sports stars retire and hand the baton to the next generation, it is time for Palm to do the same in the smartphone market. It tried to make one last comeback with the Palm Pre, just like a prize fighter comes out of retirement for one last shot at the title. While the product was good, the execution was not. It’s clear that Palm has lost a step and can not keep up with the latest generation of smartphone players.
In the end, Palm will always hold a special place in the annals of technology for me. I consider Palm to be one of the forefathers of the modern-day smartphone. Their innovations in the PDA space redefined what was possible, created the market for the electronic handheld PDA, and seeded the market for more advanced devices from Microsoft, RIM (BlackBerry) and Apple. Without Palm’s innovation and advancements, the smartphone as we know it today may have never happened.
Thanks for the memories.
I’d love to hear about your experiences with the Palm line of handhelds. Feel free to leave a comment with your favorite memory, story, game, application or Palm model that you owned over the years.
My weekly wrap-up is finally back and I made some changes based on feedback I received from our loyal readers. The biggest change is that I am going to focus on the most important news from the week (of course, based on my opinion) and provide my insights/analysis. I am not going to summarize the latest handset news & rumors anymore unless it is seriously significant. The goal of my weekly wrap-up will be to give you a quick summary of the mobile market in under 5 minutes.
The biggest news last week came from Palm. As expected, the company is “finally” nearing its end after a very slow, gradual death. Analysts valued Palm’s stock at a virtual $0 and placed a sell order on the stock. Wall Street slammed the company after they reported disappointing sales of its Pre handsets and lower-than-expected revenue. Hmm… based on my expectations, Palm is just where they should be. I have no sympathy for Palm as they did it to themselves. I’ve heard a lot of analysts blame the iPhone as the reason Palm failed but I don’t agree. Their demise isn’t based on the Pre but from their lost marketshare to BlackBerry in the corporate space over the past 6 years. The Pre was simply a last stand for Palm and it failed. Period. Could they have made the Pre successful? Yes, I believe so. If they chose Verizon as their partner (instead of Sprint) and invested in a catchy advertising campaign (like the Droid) they probably would have captured decent market share to stay afloat. Yes the Droid is based on Android, but I don’t think consumers knew a lot about Android when the Pre came out, so they would have captured people wanting a “cool” device on Verizon. We can “could’ve” and “would’ve” all day but in the end, Palm’s downfall started a long time ago.
So what do I think is going to happen to Palm? There are lots of rumors with the common theme that they will get acquired at a fire-sale. Possible suitors include: Microsoft, Nokia, BlackBerry who all need a good touchscreen device in their consumer-oriented portfolio. The most entertaining rumor I heard was that Palm will drop WebOS and jump on the Android train a la Motorola. Hmm… would Motorola consider buying Palm to increase their Android handsets? Speculation is fun, so let the rumors begin. Share your thoughts with us by leaving a comment below.
This week is CTIA Wireless’ annual tradeshow in Las Vegas. I am attending and will be front and center for all the announcements, news, and rumors. We’ll be posting info on our blog, twitter, and facebook page during.
See or hear anything else interesting in mobile. Let us know by leaving a comment below.
There’s been some interesting articles from the major tech outlets regarding sales of the Nexus One. In one article last week, mobile analytic provider Flurry released a report that estimates the first week Nexus One sales at 20,000. That number pales in comparison to the first week iPhone sales (1.6M) and Droid sales (250K).
In the grand scheme of mobile, the Nexus One sales numbers don’t matter.
The Nexus One is not about the phone and its sales, it’s about ushering in a new era in mobile. An era where the carriers like Verizon and AT&T do not have control over the handsets and the services that run on them. An era where handset manufacturers are free to innovate without carrier restrictions and can sell directly to consumers. An era where consumers can buy unlocked equipment from manufacturers and chose their carrier based upon quality of service and network without the confines of a long-term contract.
T-mobile started the process by launching its Even More Plus plans last October – a wide range of plans with no service contract. As a European-based company, they are familiar with and used to this model. I am sure Google worked with them and previewed their Nexus One plans, and T-mobile was more than happy to oblige as a way to differentiate itself and move out of fourth place amongst carriers in the US.
Now, with the Nexus One introduction, Google has introduced a new sales model for mobile phones. Sure there are bugs to work out, but the important piece is that Google is willing to experiment with a new sales model. A sales model where you can buy a phone, unlocked, and then decide which carrier has the best service. And the best part – no long-term contract.
On the heels of the Nexus One, a price war has erupted. Verizon and AT&T have both announced price decreases for their unlimited voice plans. Is this a coincidence? I think not!
A recent analysis by Billshrink showed that the Nexus One is a cheaper alternative without a contract, even at the $529 unlocked price, than competing handsets on Verizon and AT&T. In fact, it’s over $1,000 cheaper than an iPhone and the Droid over the length of the contract.
The final step in the transition to a new era is the introduction of the next generation of mobile technology – LTE. LTE will unify mobile technology across all the carriers – no need to worry about whether a carrier has a CDMA (Verizon and Sprint) or GSM network (AT&T and T-mobile). Once that transition happens over the next one to two years, consumers will buy unlocked phones and then pick a carrier based on their service and rate plan. True competition for consmers will finally exist.
Of course, for those outside the US, this era has always existed, and it shows. When you travel overseas, the handsets and services are way beyond what is available in the US. Why? Consumers have more choice. Carriers and handset manufacturers compete for consumers and have to constantly innovate – there aren’t any contracts locking consumers into poor choices. It’s about time this model exists in the US.
In the end, the Nexus One’s success will not be measured on its sales numbers, but its ability to bring a new era in mobile to the US.
Happy New Year, and welcome to our first mobile market wrap-up for 2010! It’s been one busy week in the world of mobile with Google’s Nexus One launch and a whole host of news coming out of CES. I’ll try to keep things brief, but there is so much going on, it’s going to be tough.
Let’s start with the Nexus One. There was a ton of hype and lots of good rumors leading up to the January 5th annoucement. The event was a bit anti-climatic, as most of the details had already leaked. The phone looks awesome, and it has a very iPhone-like look to it. More important than the phone itself is the sales model that Google is proposing. Instead of buying the phone on contract, you buy the phone unlocked from Google and then add the carrier service of your choice (it’s not quite THAT simple, but Google ultimiately wants it to get there). Here are a number of links that you can follow to learn more about the phone. Personally, I can’t wait to get my hands on one!
For the rest of the week, the Consumer Electronis Show has dominated the news – along with my Google Reader!!!! CES is a gadget lover’s dream. It’s been a few years since I’ve went, and if you’ve never gone, you need to. It’s quite the experience. The last time I went in 2006, I don’t think I ever saw, or ever will see, so many televisions in one place. In addition to televisions, which are all the rage again with 3-D, there were plenty of mobile announcements. Here is a list of some of the more interesting announcements. I’m sure I’ll miss a few, so if anyone has any to add, please chime in with a comment.
AT&T made plenty of interesting announcements. First off, it announced five Android devices coming to its network, the release of webOS devices by mid-2010, and a whole new app store that caters to phones of all types. Engadget provided a detailed review of the session, with photos. (AT&T should have just spent one hour detailing how it is going to improve its network to support iPhone traffic – that’s what most customers are worried about these days)
Palm’s big announcement was bringing the Pre and Pixi to Verizon. Of course, they’ve made some design changes and added the Plus moniker to the name of each, but in the end, they look the same as their original cousins available exlusively on Sprint. (The Pre’s availability on Verizon is long overdue and may be too late to save them from oblivion)
Dell formally jumped into the market with the Mini3i. It’s already available in Brazil and China but is now officially coming to the US. For some reason, they’ve decided to offer it exclusively to AT&T. (I am baffled at how phone manufacturers never learn – exclusivity for a new phone is never a good thing. If Dell wants to be a player, they need to give everyone access to the device, not just those on one carrier)
Intel announced their entry into the smartphone market with a processor for smartphones, an operating system for smartphones, and, you guessed it, an app store. (Hey that’s just what the market needs, yet ANOTHER app store! I don’t know if I am excited or perplexed by Intel’s intentions at this point)
LG announced the GW990 handset. It’s a 4.8″ monster and the first handset to use the Intel processor. It’s looks amazing in terms of processing power, and the video capability is impressive. (I spent years waiting for cellphones to get small enough to fit into my pocket so I could carry them around easily – why does the market now seem fixated on going the other direction. Has someone implemented a tax on convenience and portability that I’m not privy to?)
Finally, CES is always good for gadgets out of the mainstream and years ahead of themselves. Here’s is just a sample of some of the more interesting announcements:
My second favorite is MagicJack, a femtocell that improves the wireless coverage in your house independent of carrier (I guess if the carriers refuse to bring femtocells to market, someone else will)
Samsung announced a projector phone. Yes that’s right, a projector built into a phone that it claims can display images as big as 60 inches. (This isn’t ready for prime-time yet, but once perfected could eliminate the need to lug a laptop around on business travel)
Every year at CES there is one area that is completely overhyped and overcrowded with products from every possible manufaturer. This year’s award goes to tablets and e-readers. I don’t know how the market can support the number of announcements I’ve seen in the last two days. Oh, that’s right, I almost forgot, the market can’t support that number of companies/products. Expect a lot of carnage in the tablet market in the next 12-18 months.
If you’re still looking for more information on CES, Head over to Gizmodo and Engadget. They are producing a lot of stories from the show. (If you’re into some off-beat funny stories, Gizmodo is probably your best bet – I found this post very entertaining)
That’s all for now. I’m going to skip the list ‘o links that Devesh usually does for this week – I’ve provided plenty to chew on. In the meantime, I’ve had fun filling in for Devesh while he’s been traveling. He should be back next week, so long as I don’t jump in to “steal” one more update!