Editorial: Palm Down, But Will Be Back!

[Bob Russell]

So much news sounds gloomy for Palm, such as the most recent news we see posted about PalmOne's predicted troubles. In fact, it almost feels like mainstream "experts" on the mobile computing market can sell nothing but gloom and doom with a dab of hysteria! Everyone gives Palm a long shot at a smart phone niche market, but thinks all depends on that success. I say that's very short sighted. Why not a successful niche market in traditional PDAs, or something that the traditional PDA evolves into? I, for one, am not ready to count PalmOne out. And I don't think I'm alone because developers are not jumping ship as if they think it's sinking either. If anyone should be able to recognize a sinking ship it's them. But they see a future, and so do I. There's every reason to continue to think PalmOne will survive.

As much as people like to proclaim the PDA market dead and gone, it's not gone. It just may not keep growing like it had been. What about the toaster market? How much is that growing? They've even had to deal with the ubiquitous microwave that slowed down sales of the toaster oven. But did the toaster disappear? What about the market for analog watches? Everyone thought that was going to be gone forever when LED and then LCD display watches came out with all kinds of fancy features. But isn't there plenty of money to be made by lots of analog watch manufacturers? I wear one myself. And one of these days I'll replace it. Those markets may not expand exponentially, but there's enough there to be successful, and keep putting out good products.

If you think about it, it's not so much that it looks like Palm is going under (assuming PalmSource can provide a decent next-generation of it's PalmOS). It's mostly frustration because we think they are missing golden opportunities, and because they're just not giving us any decent PDAs on the market in this dry season.

The T5 was close. I even had one reserved at a PalmOne store when it came out. It would be an awesome PDA if done right. I think it was a great concept. But all you hear about is that it's a great PDA with some problems. Even some of the recent years have hurt Palm because of bad battery life or production quality problems combined with weak customer service. The T5 problems, Sony withdrawal, lack of product news, and all the worries about Cobalt caused me to join the Pocket PC crowd for now. But I would love to see Palm develop some devices that make it worth my while to go back to PalmOS.

I think there's still a lot of market to keep Palm going as long as they can keep the developers from jumping ship. I don't really believe that people are so happy with their current PDAs that they don't want to upgrade or replace. If nothing else, they'll want to buy a new one when the old battery won't hold a charge. A lot of the doom and gloom is just reaction to all the Clies not being sold. And without many new products that are delivering value and capability, I think a lot of people are just waiting.

Some people are happy enough with their PDA to wait on a purchase, but not to the point they will never purchase a PDA again. And there's a lot of hobbyists that are like me. We've jumped ship because we felt forced to make the leap, but really prefer deep down to be on the Palm side of things. I'm not a Microsoft hater, despite having my complaints. I actually appreciate a lot of what they've done for personal computing and PDAs. I want them to succeed. (Sorry folks... I know that's not a popular position on tech sites around the web.) But I just like the Palm approach because it feels good.

I believe PalmOne will get past this bump in the road and be able to find some core competencies that they can use to make great products. They may lose much of the smart phone market, but that doesn't mean they lose the core PIM market. The sales may be falling for PalmOS, but most of that is due to Clie gone and no sign of the basic products people can rely on.

Think about Palm fanatics... we prize the simplicity of the Zen of Palm, and want a product that works well with minimum fuss and a great UI. I don't see that with Treo or T5, but I am convinced PalmOne can get back there. And I if you don't think so, let me prescribe my favorite tonic for the depressed Palm fan... one or more daily readings of Palm Addict. It will be sure to renew your hope!

PalmOne is working on production quality and supplier issues and I'm sure they'll get that right. If they don't, we'll see new leadership that will. PalmSource will eventually have a Cobalt OS that PalmOne will be willing to adopt. I admit that's a bit of a question mark right now, but they might already have reached that point... PalmOne takes so long to produce a product that something might be well on the way already.

So, bottom line, I think Palm will come back. Not like the spectacular hopes we had for it with domination of the portable device market, or a huge piece of the smartphone pie, but with solid basic PDAs. Devices with lots of capacity, and well-executed with the best UI in the market. Eventually, they will move into SmartPhones, but I don't see them dominating there unless they get lucky. The market is too tough, and they don't seem to be taking advantage of opportunities. I just hope they do all this before something else takes over the market. There are certainly enough threats... Windows or Linux-based handheld computers with PIM features. Smartphone alternatives which will become better and better at integrating large screens and more powerful computing capabilities. And even the possibility of a new Palm-like OS to ride on top of another OS (like Windows or Linux.)

Show us proud Palm, and don't let this critical time slip away completely. Some of that momentum is gone, but there's still time. We're gonna have to see something eventually that makes the Palm platform worthwhile. A reason to buy. You don't get a free pass just because you're the sentimental favorite. When desktop OS and hardware become available in a handheld computer at a great price and with good battery life, I'm afraid it's going to be too late.

[Brian]

Great editoral Bob, and I wholeheartedly agree with most of your points.

1. The PDA isn't dead, it's evolving. I wrote about the "Hype Cycle" at Tapland here (shameless plug ). Mobile entertainment and convergence with traditional PIM, combined with wireless communications is where PDAs are heading IMHO. Also, see this article by Michael Gartenberg of Jupiter Research.

The personal digital assistant (PDA) marketplace has increasingly trifurcated in terms of functionality and that’s likely to continue. We see the three functionality forks as follows: basic PDA functionality; basic PDA functionality with media centricity; and basic PDA functionality together with media centricity and wireless features.

2. PalmOne is stumbling a bit, but I highly doubt they are doomed as all of the "gloom and doomers" are predicting. I am a bit uncomfortable with PalmOne's myopic focus on "smartphones". Even though I am a Treo 600 owner myself, they have their limitations (small screen size).

3. IMHO PalmSource is laying the groundwork to put themselves in a position where Palm OS/Linux could potentially become the dominant handheld computing, wireless handset, and embedded Linux systems OS of choice.

Brian

[TadW]

I love your article Bob! I am sick and tired of the investment community who is trying to turn palmOne into a Fallen Angel. Those wannabe analysts from Wall Street became accustomed to unreasonable returns in an unreasonably short time frame, and easily forget what and who stands behind a company such as palmOne. They have to see the big picture. palmOne revolutionized the market for PDAs, and they are not dead yet. Who cares if the T5 wasn't the big winner, or if the Treo 650 has had some supply problems. palmOne is still delivering promising products and it is only a matter of time before they get it right again.

[drc54]

In a small country like Singapore, it's hard to find a good bargain. I'm dying for an upgrade from my M515, at the right price, but your article tells me it's wiser to procastinate a bit longer ;-) May be somebody can suggest when is the T5 a good buy despite its shortcomings? It was announced at US$420. It's now retails for $350, or with the bundled wifi offering, $410.

I guess it's common practice elsewhere. Rather than discount (or reduce) the retail price, they bundle the product with accessories, SD cards, leather case, wifi card, etc. Well, myself, I'm the type that goes for OEM accessories. Like on my M515, very satisfied with my Cross stylus. And of course, the TravelPac sync/charger cable.

[Pride Of Lions]

Originally Posted by BobR

But isn't there plenty of money to be made by lots of analog watch manufacturers? I wear one myself. And one of these days I'll replace it. Those markets may not expand exponentially, but there's enough there to be successful, and keep putting out good products.

Analog watch manufacturers have millions upon millions of people who wear watches, so there is always some constant turnover with people replacing new watches. Also, there are enough watch brands and styles and types to fulfill everyone's deepest desires. And watches aren't the niche commodity that PDA's are. Yes, there are millions of PDA users and they will at some point need to replace their PDA's, but the howling you hear from the Palm OS camp is that they're (we're) unhappy with what they're (we're) being offered as replacements. That's why people who dig Palm OS deep down have migrated to PPC. And I'm not certain that there's enough of us to keep these companies afloat and solvent while they spend their time fiddling and twiddling around looking for the "next big thing."

Originally Posted by BobR

A lot of the doom and gloom is just reaction to all the Clies not being sold. And without many new products that are delivering value and capability, I think a lot of people are just waiting....The sales may be falling for PalmOS, but most of that is due to Clie gone and no sign of the basic products people can rely on.

And...

Originally Posted by BobR

I'm not a Microsoft hater, despite having my complaints. I actually appreciate a lot of what they've done for personal computing and PDAs. I want them to succeed.

I wasn't a big Sony CLIE fan when they were around (I feel hampered by their proprietary feng shui), but I always appreciated how they pushed Palm into keeping up with color screens and expansion cards and hi-res and cameras and Bluetooth and so on. People are upset with Sony exiting the market because they miss the CLIE line themselves, or like me, they miss the innovation that pushed Palm into competition.

You mention Microsoft and what they've done for the PC industry, it's analogous to how Sony and Palm and the other various licensees have helped shape the PDA industry. For instance, for all the ubiquity of Microsoft and it's bundled products, it took Firefox's explosion onto the market for Microsoft to get down to making a new IE independent of Longhorn. It wasn't Safari and Mozilla and Opera and Camino that did it, but an actual threat to IE's dominance. Without a threat to PalmOne's "dominance" it's easy to see how they are resting on yesterday's laurels. In a market where you're only as good as your last hit, Palm(One) hasn't had one in a while. They appear to be banking everything on a "home run" (Treo 650) where before they were willing to hit for the cycle and offer some different things for everyone instead of trying to get everyone to like their particular some one thing.

It'd be great to see Palm come back, but I think that the split into 2 separate companies has hurt the platform. The rumors that PalmOne might entertain another operating system for their product(s), the inability to get out of the smartphone rut, the rudderless "leadership" that appears to be fleeing like rats off of a burning ship, and the inability of PalmSource to find viable licensees for their product (as well as the inability to either get Cobalt straightened out, or hurry up and get this Linux experiment put together) is costing this platform dearly.

It's not just about us end-users and no matter how much we want what we love. "Consumer Confidence" is also about how the retailers feel about continually ordering a product that doesn't move off of the shelves as quickly as they'd like it to, the supply chain issues that inhibit smart inventory management, the profit margin that these retailers make, the customer services issues (and tales of woe) as well as the quality control and technical issues that have people returning units or repairing them or waiting for a driver release or whatever (the NAND ROM thing, the digitizer issues with the "slider" Tungstens, the lack of features that various segments of the market ask for because of the perceived need, the lack of cellular carriers willing to carry the Treo 650 or the time delay of getting the units to the carrier to get branded and out to market,...) In this "instant pudding" age where we as a money-carrying public want what we want and now, the availability of the various options will cause the most impatient of us to look elsewhere and to go spend elsewhere.

It's like how these television studios cancel our favorite shows. It's not personal because they don't care a whit about us as people and what we like. It's always about money, and how to make it. Our favorite shows are nothing to them but vehicles to bring in advertising revenue, and when that dries up they'll replace our show with something they'll tell us is better and hope we fall for it. No matter how much we whine and moan and protest, if we aren't seen as a big enough segment, our voices will go unheard, because money rules everything in the corporate world. And not just being in the Black, but being as deep as possible into the Black.

Or like how our city's football team leaves for another market. It's always because that other market is offering a new stadium deal (paid for by that market's tax-base), or they can guarantee that the market is starved for the product enough to guarantee continuous sellouts, or something money related. It's never about the 7,000 diehard fans who attended every game in the old city since the team's inception, it's always about the 55,000 other fans who decided that the product being delivered wasn't worth driving to the stadium to pay for.

Nothing corporate is about either intentionally hurting our feelings or making us feel good. Everything these mega-conglomerates do is about making as much money as possible. The decisions they make take years to come to fruition, and if they judge wrong it takes years to address and correct them. I'd love to stay a Palm guy, but to be honest, I'd have jumped to PPC a while ago if I wasn't a Mac guy. And if TapWave wasn't around. And even then it was a tough decision as I'd have had to buy Missing Sync either way to get my device to work. I went to Costco strictly to buy this certain iPaq (I forget which one) and if they weren't sold out, I'd have gotten it, Mac guy and all. Luckily for me, the Zodiac2 is such a great PDA that I'm glad Costco was sold out.
POL9A

[Laurens]

BobR, I hope you're right, but I am not as optimistic as you are. Fact is that PalmOne's leadership wants to focus on SmartPhones, because they no longer see real growth in the PDA segment. They are not doing so bad in the PDA market anyway, but it's not enough because there's no real growth. There are still plenty of people using OS4 devices such as the M500/M515. That's exactly the problem with producing well-built devices: people will use them for years.

Sales of the Treo account for about 40% of P1's revenue from the last financial quarter and they expect the ratio to become 50/50 at the end of the financial year 2005. (Which, I believe, ends in May.) Bear in mind that the Treo is a good deal more expensive than any of their current PDA's. In fact, it's much too expensive for Joe Average. There could be room for growth if they released a more affordable, cut-down range of SmartPhones.

[Pride Of Lions]

Another thing to remember is that, although it is nice to use the number of Palm OS programmers as a barometer for the health of the platform, we must remember that programmers program. That's what they do. And when they feel that the Palm OS is fading, there won't be any sentimental feelings keeping them spending their time and energies coding for a shrivelling segment. They'll go code for the PPC and barely look back.

Even Laurens made his Sunrise reader perfect for the PPC first before coming back to give us Palm users something. It seems that he realizes that the "old money" is in Palm OS and the "new money" is in PPC.
POL9A

[Laurens]

Originally Posted by Pride Of Lions

Even Laurens made his Sunrise reader perfect for the PPC first before coming back to give us Palm users something. It seems that he realizes that the "old money" is in Palm OS and the "new money" is in PPC.
POL9A

Well, actually there is no release of my viewer yet. I do have a working WinCE version, but I've suspended work on that until after the PalmOS version is released. The reason I'm working on the PalmOS version first is because almost the entire Sunrise userbase is PalmOS-based. From a business perspective, it would be stupid to ignore all those users.

[Pride Of Lions]

Originally Posted by Laurens

Well, actually there is no release of my viewer yet. I do have a working WinCE version, but I've suspended work on that until after the PalmOS version is released. The reason I'm working on the PalmOS version first is because almost the entire Sunrise userbase is PalmOS-based. From a business perspective, it would be stupid to ignore all those users.

I based my comment on seeing new beta releases for your product on MobileRead it seems every other day for the PPC platform. The smart money does say that there are several current Palm OS users and if what you're offering is better then everything else, they will buy your product.

So, mea culpa.
POL9A

[Bob Russell]

Originally Posted by Pride Of Lions

Everything these mega-conglomerates do is about making as much money as possible. The decisions they make take years to come to fruition, and if they judge wrong it takes years to address and correct them.

Yes, it's about the money. But, fortunately, they have to produce something worth buying to get that money. And despite the way it looks like they're taking the long way around, I believe that the Palm companies have a leadership that will eventually put Palm where it needs to be. At any rate, you've at least found the Zodiac2 that satisfies your needs for now! Nobody knows for sure, but I do remain very optimistic.

And so far the defections on the developer side have been relatively light. Even if they are willing to jump ship, there's a huge investment that's been made by these folks in the PalmOS platform, and it might be harder to leave than you think. If the writing is on the wall, they'll leave, but I believe that it's more than a pure business play with a lot of the great developers. We forget it sometimes, but these are some really nice and generous people that we have in the Palm development world. They really care about their work, their customers, and the PDA world in general. My hats off to them!

Originally Posted by Laurens

BobR, I hope you're right, but I am not as optimistic as you are. Fact is that PalmOne's leadership wants to focus on SmartPhones, because they no longer see real growth in the PDA segment. They are not doing so bad in the PDA market anyway, but it's not enough because there's no real growth.

Your perspectives certainly makes one stop to consider, and your opinion carries great weight with me. I agree that PalmOne is almost "betting the business" on smartphones. But I don't know that cut-back economy versions of a Treo would really get the job done for the consumer even if they are more affordable. I'm not convinced that they will find long term success with smart phones, but they might. And Palm is still very ambitious and ready to take risks to take hold of the grand prize. But my point is that even if they fall short, and have steady but not growing sales, I believe they can "make a living" on traditional PDAs without having to dominate.

As long as they can sell enough to support the establishment of Cobalt on Linux, and they can continue to make some great PDAs, I think Palm will survive. But PalmOne management surely won't think that way (just looking to survive), because even if it would be an acceptable outcome for the consumer, it would be considered a failure by the ambitious corporate mogul. They want to be Walmart, not the local watch shop in a small town. Time will tell, but for now I'm still optimistic

Originally Posted by Ballistic

IMHO PalmSource is laying the groundwork to put themselves in a position where Palm OS/Linux could potentially become the dominant handheld computing, wireless handset, and embedded Linux systems OS of choice.

I sure hope so!

Originally Posted by TadW

I love your article Bob! I am sick and tired of the investment community who is trying to turn palmOne into a Fallen Angel. Those wannabe analysts from Wall Street became accustomed to unreasonable returns in an unreasonably short time frame, and easily forget what and who stands behind a company such as palmOne. They have to see the big picture. palmOne revolutionized the market for PDAs, and they are not dead yet. Who cares if the T5 wasn't the big winner, or if the Treo 650 has had some supply problems. palmOne is still delivering promising products and it is only a matter of time before they get it right again.

Thanks TadW! As much as the investment community and corporate leaders are ambitious to our detriment, it's also the whole reason we have Palm and other companies in the first place. I guess we have to take the good with the bad. I do agree with you completely.. despite some wrong turns or a preoccupation with smart phones, I still think they'll get it right again for the traditional PDA also.

@drc54.... Be patient and prices will fall. Despite my complaints about the T5, I would love to have one myself. And software authors for the essential software like DateBk5, ShadowPlan, backup programs, etc are all doing what they can to make things work despite the problems. It could be worse...

[Pride Of Lions]

Originally Posted by BobR

We forget it sometimes, but these are some really nice and generous people that we have in the Palm development world. They really care about their work, their customers, and the PDA world in general. My hats off to them!

I agree. I do not lump Palm OS developers into my feelings for the Corporate Conglomeratiin general. I think our developers have a more human face than the corporations. Our developers are ones of us and I love their work. I just hope that the platform doesn't evaporate underneath them, but I know that if it does, they'll adapt and go code for who pays them. Hopefully.
POL9A

[ignatz]

Nice discussion. I think that we're all on pins and needles wondering what the future will bring for Palm, for though gloom is about, truly anything could happen. I am another in the crowd of those who are not quite ready to give Palm up for lost. It is difficult to maintain a product these days if it is not an iPod, a smash hit all over. I think that Palm's death has been prematurely reported, but that's not to say that it won't die.

I have dabbled in PPC, but I just could not switch, though I truly admired the hardware (Dell Axim x30 - and it certainly would have been an improvement in all ways but the screen). Still, as time passes and options are few, what are we to do? My T|E gets hard wear and will not last forever. I will use PPC if I must, but it will be bleak world of PDAs if there is only one significant OS. Perhaps Linux handhelds will grow into the gap, or perhaps smartphones will rule the day. I'm crossing my fingers that when the time comes to purchase again, that there will be more and more options awaiting my eager fingers.