Palm CEO's Philosophy: Sell Razor Blades, Not Razors

Posted By: Ed on Friday, February 23, 2001 8:26:26 AM

At yesterday's speech to the Massachusetts Software and Internet Council, Palm CEO Carl Yankowski told them, "Don't be a hardware company. The margins are very tough. Before you get into hardware, you want to be sensitive to the whole razors and blades thing."

He was referring to razor companies that sell the original razor with a very thin margin but make very high margins on replacement blades. He thinks of handhelds like razors; the original device can be sold with a thin margin because the real profit is in selling applications and services for those devices.

Mr. Yankowski has identified four ways to get recurring revenue for Palm:

Wireless business services
Software applications
Internet access
Mobile portal access

He talked up the advantages of co-opetition, the term for companies that both cooperate and compete. "If somebody's in this space, he's either going to visit me or Bill Gates. I want them to visit me." He also said, "in this market, the tide is rising so fast that it makes the issue of market share irrelevant. We're selling all of the devices we can make, and so are our competitors. So let's build the market together now, and we can fight downstream for who's going to get a bigger chunk of it."

He finished up by warning about getting over excited about 3G wireless. "Don't freak and overinvest in 3G technology. The pipes are way ahead of the applications and deployment."

More Stories Like This...

PalmGear Website Relaunched
Digital Life 2008 Show Cancelled
Palm Targets Additional Developers with Cease & Desist Letters
Dmitry Grinberg Gets C&D'd by Palm
Verizon and Alltel Treo 700p/wx ROM Updates Released
Alltel Treo 755p Reduced to $99
More articles about General News

Permalink | + Bookmark & Share

Article Comments
8 total comments

The following comments are owned by whoever posted them. PIC is not responsible for them in any way.
login or register for free in order to post comments.

Market share...

I.M. Anonymous @ 2/23/2001 2:00:17 PM #

Interesting Strategy... could work if Palm could get everything in-house straightened out. Now, market share being irrelevant? I don't think so. It's true that the whole market is growing. However, getting market share now and fighting for market share later are very, very related.

I don't believe Ceo's words

I.M. Anonymous @ 2/23/2001 3:03:10 PM #

Palm's Ceo is saying so because he is preparing us to accept the new over priced M505.
Everyone with a little knowledge in computer and electronics knows that Palm's prices are often too high
Bye
Riccardo

RE: I don't believe Ceo's words

I.M. Anonymous @ 2/23/2001 6:11:36 PM #

I think you are absolutely right about pricing. I suspect it will only get worse. The success of the iPaq has proved that, if you throw in some irrelevant gizmos and call them "features", a higher price can be charged.

RE: I don't believe Ceo's words

I.M. Anonymous @ 4/8/2001 10:29:45 AM #

You guys are both idiots! The price on the M505 is exactly where it should be.

palm has very bad publicity!

I.M. Anonymous @ 2/24/2001 12:00:21 AM #

"palms allow text only browsing, p.pc offers FULL COLOR web browsing"

"palms limit you to web clipping"

"you can't use ms word/excel on palms"

What do these microsoft commonly said sentences have in common?
THEY'RE LIES!

I use avantgo with my palm, and I can browse in full color and see full color pictures, and acess virtually any webpage.

I have "documents to go", and I can see word/excel files (its a demo, if you suggest me a freeware word editor, I'd really appreciatte it!). And no, I am not limited to web clipping.

If palm showed people these are lies, they'd win even a bigger market share!

**message by ROD**

Cool site

Waptized @ 2/24/2001 12:05:29 PM #

Very nice site. http://www.yourmobile.com">Yourmobile

I don't really plan on buying any blades

kisrael @ 2/25/2001 2:20:48 PM #

* Wireless business services

well, this could really be a cashcow...

* Software applications
they've set up such an open environment,
there's so much good 3rd party stuff out there,
it's a pretty competitive space (hopefully they
won't try to close out their system!)

* Internet access
* Mobile portal access
ehh, again, the meager success of the VII
makes me wonder if these are gonna be a big hit.

power users who want this stuff might go for
a CE model (at least right now) because of the
better screens.

Services not hardware

I.M. Anonymous @ 2/26/2001 2:05:33 AM #

Think Palm's focus on services is right on - rather than focusing on processor speed blah blah it's important to know what specific tasks a machine performs well.

At www.palmtop-pro.com, the web-site for a German language magazine specializing in handheld computers (Palm/Symbian/PocketPC), there is also a focus on what can be actually accomplished with a machine, rather than on traditional bean counting. For example, they've reported on the Palm-based "CyberTracker", a program which is helping the bushmen in southern Africa to survive, as well as on how a Palm was used in the Paris-Dakar ralley.

Looks like once Palm's CEO has a good night's sleep and a shave, he'll be ready to take on the world ....

Palm Software on sale