Analysts: Palm playing catch-up

Palm's deal with IBM is a good first step toward enterprise credibility, say industry analysts, though it won't be enough on its own to depose Microsoft's Pocket PC. To do that, Palm needs to establish more enterprise partnerships, deliver OS 5 quickly, and offer a choice of enterprise-class suppliers. These leading industry analysts shared their thoughts with Tech Update:

• Isaac Ro, Aberdeen Group
• Jessica Figueras, Ovum
• Kenneth Smiley, Giga Information Group

Palm now has a great enterprise channel through IBM--a critical first step to challenging Microsoft in the enterprise PDA market, says Isaac Ro of Aberdeen. But WebSphere alone won't make the Palm OS enterprise worthy. First, Palm must deliver on its promises for OS 5.

Isaac Ro Analyst Aberdeen Group

By partnering with IBM's WebSphere team, Palm has allied itself with IBM's brand strength in the enterprise application market, thereby opening up potential for new enterprise sales opportunities. Palm executives have termed this partnership as the cornerstone of Palm's enterprise strategy, yet the reality is that this is more of a "me too" announcement for Palm since a similar mobile WebSphere client has already been announced for Pocket PC.

Microsoft's enterprise sales and distribution channels are a core competency and will be difficult for Palm to compete against, especially as Microsoft continues to improve upon its mobile platforms. This announcement gives Palm a seat at the table, but certainly doesn't guarantee that they will be dealt a good hand.

Will the capabilities of WebSphere convince a significant number of enterprises to choose the Palm platform? Not necessarily. Enterprises already running WebSphere now have the option to select the Palm platform, but a Pocket PC client is already available. From IBM's perspective, this deal, while strategic, is hardly critical to the company's future. It's a non-exclusive relationship with no financial underpinnings. It merely underscores IBM's desire to become a major services player in the wireless space while at the same time keeping the door open for partnerships with other handheld players moving forward.

Now that Palm has a great enterprise channel through IBM, the challenge of delivering on expectations for Palm OS 5.0 is the next major issue to tackle. From IBM's perspective, it remains unclear to what extent, if any, this relationship will carry over to IBM Global Services. That element to IBM's mobile strategy needs to be clarified.

Ultimately, this deal goes far deeper than the previous partnership between Palm and IBM, which resulted in little more than a series of re-branded IBM devices that enjoyed minimal differentiation from their Palm counterparts. This time, the partnership includes collaboration at the technology, licensing, and sales and marketing levels, which will hopefully provide new opportunity for Palm to gain ground in the enterprise market. The real question surrounding this announcement is to what extent enterprises seeking to mobilize WebSphere data will choose to employ the Palm OS solution versus the Pocket PC version.Palm can't rely on its products' features to win over enterprises, says Jessica Figueras of Ovum. The company needs to take a page out of Microsoft's playbook--offer a choice of enterprise-class suppliers.

Jessica Figueras Analyst Ovum

It's ironic that we're now asking whether Palm can be a true contender in the enterprise PDA market, when just a few years ago we were asking the same about Microsoft!

True to form, Microsoft really has caught up quickly on the technology side. The mass of enterprise features it provides has left Palm OS looking more than ready for its planned overhaul. But then Palm still wins the usability war hands down. After all, a powerful Pocket PC device isn't much good when the battery runs out after a few hours.

But in the end, it won't be features that determine who succeeds. What's important is who can provide enterprises with the most choices when it comes to picking suppliers, hardware and software solutions. This is what has propelled Microsoft forward so quickly.

Microsoft has signed up the biggest and most powerful OEMs--HP/Compaq, Toshiba, and Casio. These players know how to sell to enterprises. Compare that to Palm and its partners: most of them have been selling PDAs to individual users for years. That's a dangerous position to be in when the business decides to standardize, with a bulk deal from its existing PC vendor.

Microsoft also has solid back-end mobile software and tools support for its own platform. Again true to form, it has started to integrate mobile functionality into its standard enterprise offerings. Palm waited too long before developing a mobile enterprise software solution.

The deal with IBM is a great one for Palm. IBM is a terrific partner to have--it can provide the enterprise credibility, technology, and implementation muscle that Palm lacks. But IBM Global Services will also work with Microsoft platforms, if that's what customers want. I can't help feeling that it's too little, too late for Palm.IBM may lend Palm some enterprise credibility, but it will need more partners and compelling products to catch up to Microsoft. And, says Kenneth Smiley of Giga Information Group, it better deliver its OS 5 products quickly.

Kenneth Smiley Director Giga Information Group

Palm's ultimate success doesn't depend on its partnership with IBM, but this partnership does lend some additional semblance of credibility, at least for IBM WebSphere customers who want to do something with a Palm OS device. How successful Palm will ultimately be depends on Palm's ability to bring new and compelling products to market on the mobile platform side of the equation, coupled with server-based offerings or additional partnerships to round out offerings that provide a means for an organization to reorganize its business to make use of mobile offerings.

This deal alone likely will not give Palm a competitive edge against Microsoft. The Pocket PC platform is hands down the choice in the enterprise market today where organizations are actively deploying mobile platforms for business purposes (in other words I am excluding individuals who bring their Palms to work which are often included in some views of the enterprise). Palm must deliver OS 5 product to market quickly and provide compelling applications that will be attractive to enterprise customers to remain competitive in the enterprise market. This deal doesn't hurt them, but it also isn't the sole answer to Palm's enterprise woes.

WebSphere probably no help

I doubt that anyone is going to buy WebSphere to get to the Palm platform. In fact, there is some question whether or not WebSphere applications will be written to the Palm OS at all or to something else like Java, in which case the applications could ostensibly run on Pocket PC, Symbian, or any other OS that has Java capabilities. WebSphere is an expensive proposition and a significant investment by any organization considering it; there are quite a few other options that are likely to appeal to organizations without an existing WebSphere commitment. If WebSphere applications only ran on Palm, that might give Palm a boost, but IBM would never do this given the existing penetration of Pocket PC devices in the enterprise.

Additional measures

Both Palm and IBM need to work out the development strategy and target developer resources accordingly. If the applications don't exist, the platform isn't going to matter. Palm for its part also must offer less expensive solutions or partner to offer these solutions for potential customers for whom WebSphere isn't an option.

IBM and Palm's last collaboration wasn't very successful, so they don't have far to go to exceed prior results. I suspect in terms of dollars for Palm's OS side of the house this deal holds more promise than for the hardware group.

Do you agree with the analysts? What do you think Palm has to do to give Microsoft's Pocket PC a good run in the enterprise market? TalkBack below or e-mail us with your thoughts.