From one David to another: Palm isn't dead--at least not yet

AnchorDesk

From one David to another: Palm isn't dead--at least not yet

David Berlind
Executive Editor, Tech Update
Monday, April 30, 2001

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It's ironic that Microsoft was planning Pocket PC's first birthday party around the same time Palm lost almost half its value in the stock market. Is one year all it takes for Microsoft to dispatch a well-entrenched competitor?

If you believe, as my AnchorDesk colleague David Coursey does, that Pocket PC will steamroll Palm, then perhaps so. Fortunately, David, a card-carrying member of the Pocket PC brigade, included a disclaimer: He's short on substantive data regarding Palm's future plans.

BEING A DEVOTEE of the Palm platform, I decided it was worth a few calls to Redmond and Santa Clara, Calif. Now, I'm more confused than ever. My conclusion: It may take another year to figure this out, because the similarities outweigh the differences right now.

Both Palm and Microsoft recognize corporate acceptance as imperative to long-term success. They are coming at this from opposite ends of the same spectrum and are destined to meet in the middle. The question is, who will get there first?

Palm achieved corporate penetration via the handheld device itself. Now it's investing in infrastructure to provide a solution that keeps workgroup-based PIM and corporate application data in sync with those devices.

IN THE LAST YEAR, Palm has either completed or announced the acquisitions of AnyDay.com, WeSynch, and Extended Systems--pieces that will help Palm complete the server and synchronization side of the puzzle.

Microsoft got into corporate America with its infrastructure. To achieve its end-to-end solution, it's playing catch-up on the device side of the equation. After several generations of its handheld OS, starting when Windows CE was showcased on HP's color LX devices, the renamed Pocket PC operating system is now getting serious lift thanks to Compaq's iPaq.

Both companies are trying to stitch the whole enchilada together. And both are accommodating non-PDA devices, such as smart phones, by modularizing the operating systems.

SO IS ANYTHING DIFFERENT enough to affect the long-term prospects of either platform? You bet.

Palm's key principles (which it'll continue to pursue) are simplicity, size, and battery life, says Chief Competitive Officer Michael Mace. Mace says the Pocket PC is too big, too complex, and requires too many pit stops at the recharging station to be appreciated by anybody but the techno-elite. "Handheld technology is immune to Moore's Law," he says. "The situation is not about to improve for Pocket PC any time soon."

But Mace speaks fondly of the forthcoming Palm 500 and 505 and the Secure Digital expansion slot both will support. He anticipates that within a year or so, this slot will allow Palm users to have up to a gigabyte of memory. In that case, Moore's Law would be in full effect, and Microsoft could benefit from the same advancements. In fact, that could ameliorate the Pocket PC weaknesses cited by Mace.

AND MICROSOFT IS CITING devices and form factors--handhelds, smart phones--that sound very much like what Palm is promising. The two companies' device road maps are heading to the point at which Moore's Law will no longer be a differentiating factor.

Microsoft's Mobility Group has one key priority--data, says Product Manager Ed Suwanjindar. He says Microsoft is focused on getting data out to handhelds in a way that is optimized for the form factor (meaning display type), tailored to time-sensitivity requirements, and tuned to the specific business applications.

Microsoft has one distinct advantage in this respect: A large amount of the data that needs to find its way into handhelds already resides in repositories that Microsoft owns--Exchange Server, SQL Server, and Microsoft Access. Palm, in contrast, owns no repositories (unless you count its online repository/synchronization service AnyDay, which I don't).

SO, IS IT TIME TO ADMINISTER last rites to Palm? Palm will probably never die at the hands of Microsoft or any other competitor. But it would do Palm some good to review the history of former industry titans Novell, WordPerfect, Lotus, and Netscape--former hands-down leaders in their respective markets reduced to footnotes shortly after Microsoft opened its war chest.

Extended Systems CEO Steve Simpson sees Palm's increasing device-agnosticism (an attribute of both the Extended and AnyDay platforms) as a major advantage over the Pocket PC strategy that Microsoft's Suwanjindar freely admits is focused on advancing Microsoft's .Net agenda.

But history tells us that Microsoft competitors rarely get far by raising the nonproprietary issue. Microsoft eventually supports the standards that really count--at least to the extent that customers are either satisfied, or think they are.

CAN PALM HANG ON? Except for focusing on old priorities, it is doing the right things. As a part of its acquisition strategy, it must continue to get complete control of the platform's food chain. The OS, Internet services, and synchronization middleware are not enough.

Focusing on a non-proprietary food chain makes it easier for users to switch to the Pocket PC platform and ultimately will do Palm no good. And true, while it gives those in the Pocket PC world a chance to convert to Palm, what is good for the goose is good for the gander. Palm will need to devote all its resources to the success of one platform, leaving no openings for a competitor like Microsoft to siphon off its user base.

Ultimately, Palm's success may depend on getting out of the hardware business altogether. Better to let companies like Kyocera and Handspring worry about razor-thin margins while they pad Palm's pockets with OS licensing fees--which are ultimately more lucrative and cause fewer headaches.

EVEN THAT MAY NOT BE enough, but I hope it is. I like my Palm V, feel comfortable in its environment, and look forward to future offerings from other licensees and testing my new Palm-powered Kyocera phone (stay tuned for a review).

But part of me is thinking that David Coursey may get a victory party invitation from Microsoft after all.

We'll definitely know more in a year.

NOTE TO READERS: To read David Berlind's in-depth take on this story on ZDNet Enterprise, click here.

Is Palm going to fight the good fight against Pocket PC? Or is the Microsoft juggernaut too strong to resist? TalkBack to me.

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