Can Palm survive?

Anthony Caruana
28 January, 2008
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Late last week Palm Inc announced the closure of 30 retail stores — its entire bricks and mortar presence in the United States — ending one of Palm’s worst years, in my view. One way to measure the depths that Palm has plumbed is to compare it with two other companies.

Let’s start with Taiwan’s High Tech Computer Corporation, better know as HTC. Over the last couple of years HTC has moved from little-known manufacturer to market leader. 2007 saw sales accelerate and the release of a number of different devices. The smartphones it has released have come in a range of form factors and cater for the needs of an increasingly diverse range of users. In my view, HTC has been the most important hardware innovator of the last year or so.

Apple has plans in place to open a number of new stores in the coming year — not only in the United States but in territories where Apple has thus far been absent. The iPhone has achieved for Apple what the original Palm Pilot did for its maker — putting Apple into the consciousness of all shoppers.

Palm hasn’t released an innovative device in some time. The standalone, or classic PDA, device has gone the way of the dodo but Palm was well placed when the smartphone revolution began with its Treo (an acquisition from Handspring). However, it has done precious little since then. There’s a real sameness to all the Treos. All have a square screen sitting above a QWERTY keyboard. There’s a choice of Windows Mobile (someone else’s OS) and Palm OS (the same OS the devices have been using for years) but no evidence of innovation. Just small, incremental changes.

Last year Jeff Hawkins, Palm’s founder, announced something different. The Foleo was pitched as a mobile companion — a sort of micro PC that would use your smartphone’s internet connection via Bluetooth. Apparently, it was almost ready for shipping in late 2007 but it was pulled at the last moment. I suspect that the decision is being rued given the monstrous success of Asus’s Eee PC and Nokia’s move into the tablet space with the N800 and other, similar devices.

The last major change in the World of Palm was the introduction of Windows Mobile devices. At the time I though this would be a trigger that would give the company a shot in the arm. Certainly, there was a jump in sales at the time. In retrospect, I wonder if that was the beginning of the end. Rather than innovate with its own OS, Palm chose to order one off the shelf.

All of this suggests to me that the culture of innovation that was the lifeblood of Palm in its early days has been extinguished and that Palm is moving from a development/innovation/investment culture to one of cost containment and risk adversity.

Each week I visit number of different retail outlets to observe what gear salespeople are pushing and what customers are asking for. When I look at the smartphone and PDA markets I see lots of people playing with HTC’s Touch, the iPod touch, various Nokia, Sony Ericsson phones and any number of other converged PDA-type devices. I can’t remember the last time I heard someone asking to look at the latest Palm.

I know that this might read like a Palm-bashing exercise. It’s not intended to be. What I would really love to see is the spirit of innovation that permeated Palm when it made the wonderful Tungsten T3 (possibly the best PDA ever made) and even the LifeDrive. I’m certain that not every one of HTC’s current range of 26 different handhelds and phones will be a successful seller. However, there will be lessons learned from the failures and HTC will be a better company for it. I hope Palm can regain its sense of innovation and risk-taking because the competition it can bring to the market will force everyone to deliver more to consumers.

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