A tale of two handheld players: RIM vs. Palm

This a tale of two well-known handheld device makers--Research in Motion and Palm--and their standing in the market. Both companies had investor powwows this week.
Written by Larry Dignan, Contributor

This a tale of two well-known handheld device makers--Research in Motion and Palm--and their standing in the market.

Both companies had investor powwows this week. Palm held an analyst meeting and RIM reported strong earnings.

The biggest difference between the two? One, RIM, knows where it's going and is pushing the R&D envelope. The other, Palm, doesn't know its direction well enough to serve up any meaningful details.

Let's compare and contrast:

On the product roadmap:

Palm served up little detail beyond saying that its Treo line will be updated. There may even be more snazzy form factors as Palm rolls out a "platforming" strategy that will  enable it to develop devices faster. Palm also talked about  differentiated smartphones. "Although the company made clear that it has multiple new products coming out this year, it refused to highlight any time-tables, price-points, or form-factor data points at the conference," said Morgan Keegan analyst Tavis McCourt.

RIM had a different tone since it just launched the  BlackBerry 8800. "The BlackBerry 8800 launched on schedule in the quarter with AT&T in the U.S. and was announced with  approximately 30 carriers in the rest of the world," said  RIM co-CEO James Balsillie on the company's earnings conference call. "This is the fastest global ramp  we have ever had for a new product launch and the rollout  across these multiple markets has been a success."

On the consumer market:

Palm merely hinted more consumer friendly devices, according to McCourt. "We do believe that new handsets will be  developed at lower price-points, with more limited  functionality in order to target the massive consumer opportunity more effectively," said McCourt.

RIM is already lighting up the consumer market. "If I had to bet, I don’t think it will be too long before consumer  outsells enterprise. I think it might be a little sooner than people imagine but it is just going to be race of who  is growing more extra fast," said Balsillie. Meanwhile, RIM has worked on packaging the Pearl to appeal to consumers. After all, a red Pearl or white Pearl is considered innovation by carriers.

On the software platform:

Palm's big news was that it would restore the Palm OS via Linux. In other words, Palm devices will now be available in  Windows Mobile and Palm. The big questions: Can the Palm OS  regain its momentum after being neglected? Will Palm muddle  its OS message with Palm and Windows? RBC Capital Markets analyst Mike Abramsky speculates that Palm may cook up web  applications for storage, photos and applications to woo small businesses and consumers.

RIM is straightforward. It has its own operating system that will gain momentum as Pearls are sold at a rapid clip. While Windows Mobile may be a threat, Balsillie noted that "a switch went off sometime" as carriers saw RIM's software as more than just a niche  business application. "There is a real intense focus on  carriers for profit right now and they have seen that the  strategic BlackBerry platform is not just a browser pipe  model to disintermediate them," said Balsillie. RIM also recently announced the BlackBerry Java developer environment so new applications can be built.

International growth:

Palm talked about its international plans a bit, but for the  most part the company is confined to North America and Latin  America. ThinkEquity analyst Jonathan Hoopes notes that China is going to become Palm's focus, but not until 2008 or  2009.

RIM has been expanding internationally and forging carrier agreements to carry the BlackBerry. Carriers added in the quarter included CLARO in El Salvador, Guatemala, Nicaragua, Paraguay, Uruguay, DoCoMo U.S.A., Vivo Brazil, Fastlink  Jordan, China Mobile Hong Kong, and Vodafone in Bahrain,  Indonesia, and Malaysia.

Advantage RIM by a wide margin.

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