Palm takes the middle path

Handheld leader says simplicity is still the focus, while adding expandability, Bluetooth and integrated wireless

Palm Computing is planning to fend off handheld computing rivals such as Microsoft and Symbian with more colourful, faster gadgets and a new push into the enterprise.

At a briefing on Thursday, Palm promised thinner, lighter PDAs (personal digital assistant), with more colour devices on the way, all in the first half of the year. Upcoming products will use tiny SD (Secure Digital) cards for expansion, which will allow add-ons such as extra memory, games, cameras or Bluetooth units.

Palm licensees such as Handspring and Sony already offer hardware expansion, and most Microsoft-powered Pocket PC devices are expandable.

Also coming up in a couple of weeks is Palm's 4.0 operating system, which was released to developers at the end of 2000. The new OS supports many new communications features, such as SMS (short messaging service) and Bluetooth. It also supports USB and a variety of improved security measures, eliminating a well-documented developer back-door.

Palm-based smartphones will appear on the market from licensees such as Kyocera.

Later in the year, Palm promises a Bluetooth module, which will let Palm devices wirelessly communicate with Bluetooth-enabled peripherals, PCs and other handhelds -- when they arrive on the market. High-resolution screens will be available on Palm PDAs, which will also include sound and graphics coprocessors for an improved multimedia experience.

Next year Palm will move to an ARM-based chipset, which will improve battery management and allow for such advanced features as multiple screen resolutions and multitasking, though Palm has not committed to introducing those features.

In laying out its strategy, Palm is picking out its path between Microsoft's powerful but comparatively complicated handhelds on the one hand, and Symbian's vision of integrated mobile phone-organisers on the other. Both concepts are fundamentally flawed, Palm claims, touting its own vision of a versatile, yet simple tool.

The question, say industry experts, is whether Palm's vision will ultimately appeal to two large target markets: the masses who use mobile phones, and corporations who want to use handhelds as a business tool.

Microsoft has said that Palm's move toward more power and functionality is an admission that high-powered, Pocket PC-style devices are the future. But Palm says it continues to focus relentlessly on simplicity above all, rather than speed and power for their own sake. "The secret of success is not just what you put into it, but what you leave out," said Chris Dunphy, director of competitive analysis at Palm.

He said Pocket PC devices are destined to remain a niche market for "a few technophiles who get turned on by having 200MHz buzzing away in their pocket doing nothing very useful".

Palm also distances itself from the smartphone market. Smartphones, which combine PDA and mobile phone functionality, are being held out by mobile phone giants such as Nokia, Ericsson and Motorola as the future driver for handset growth. Those and other handset makers have allied with UK handheld maker Psion to form the Symbian alliance, whose smartphone platform is based on Psion's EPOC operating system.

Smartphones are something like combined TV-VCRs or the short-lived trend for combining a PC and a printer, according to Gordon Cline, Palm's security product manager, enterprise division. He said there is a fundamental difficulty in combining two technologies that are maturing at different rates.

"There's a sense that all this functionality will be built into one device, but that's not necessarily the case," Cline said.

"Mobile phones don't get smarter and devour the handheld," added Dunphy. "They co-exist in interesting ways."

Palm's smartphone entry, manufactured by Kyocera, is similar to the Ericsson R380s device: it looks like a fairly chunky mobile phone, but the keypad flips down to reveal a standard Palm interface. The Kyocera phone is not yet available in Europe.

The company is fundamentally moving away from its identity as a handheld computer maker, focussing instead on promoting its operating system and expanding into corporations. As part of this strategy, Palm is purposefully leaving many hardware innovations to its licensees, while maintaining a relatively conservative platform for Palm-branded devices.

"There are definite indications that Palm is looking in other directions, but hardware is still a large focus," said IDC analyst Tim Mui.

The shift away from hardware is controversial, however, because hardware sales still make up the lion's share of Palm's revenues.

Palm revealed the direction of its enterprise push this week with its acquisition of Extended Systems, which makes software for integrating mobile devices with corporate networks. The acquisition means Palm, through Extended Systems, will be supporting competing platforms such as Pocket PC and BlackBerry.

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