Opinion: Palm's Hardware Strategy
The number one complaint I've heard about Palm's latest models, the m500 and m505, is that they aren't innovative. They don't break any new ground or offer any features that aren't already in a model put out by one of its licensees. While this is true, what most people don't seem to realize is that this isn't from a lack of vision or nerve on Palm's part; it is a necessity for the Palm platform as a whole to succeed.
Palm Inc. is in an unusual position. It is both the licensor of the OS and the largest licensee. It licenses its operating system to companies and then competes against them in selling handhelds that run that OS. It is not in Palm's best interest for Palm the licensee to use its close relationship with Palm the licensor to crush out its competitors. If Palm wanted to drive Handspring and HandEra out of business, they could do it in a heartbeat; simply withdraw their access to the OS. The fact that Palm licenses the OS at all should be an indication that Palm wants its competitors to succeed.
Michael Mace, Palm's Chief Competitive Officer, spelled out his company's strategy for new hardware a few months ago. Palm doesn't see itself as the company that is supposed to break new ground. It allows its licensees to do that. This allows the licensees to compete successfully against Palm... but also take all the risks.
Palm let Handspring break new ground with peripherals by developing the Springboard standard. Palm then waited until it was sure people really wanted this until coming out with its own, the Secure Digital slot. It is now letting Sony experiment with a higher-resolution screen and built-in music playback. If that turns out to be a success, Palm will probably incorporate those features into its next handhelds. If it bombs, Palm will learn from the mistakes without having to pay for them. It will then integrate what it has learned into the Palm platform so that all the licensees can benefit from each one's experiences.
Here's an example of how this works. According to Mr. Mace, before the end of this year Palm will release a successor to the VII series with a higher resolution screen and real-time e-mail reception. Palm will use the experience Sony has gained with the Clie and combine it with its own experience with the VII series to create a model that is better than it could if it was working alone.
Palm also needs its licensees because its long-term plan is to stop making handhelds at all. It wants to be a pure software company not a hardware/software one because software is where the real money is at. If you want a comparison from the PC realm, they want to be Microsoft, not Apple. If they crush out HandEra and run Sony off, they will always have to make the devices, too.
Unfortunately for them, the Palm Economy isn't large enough yet to support a company that just licenses the OS so they have to add to their coffers by making devices, too. This makes the licensees nervous so Palm has to walk a fine line between working with them and competing against them. The term for this is "co-opetition", made by combining "co-operation" and "competition". That's the reason why Palm will never release a model that is vastly superior to those of its licensees.
If you think about it, the arguments over whose handhelds are better, Palm's or any of its licensees', are pointless. From Palm's point of view, they win no matter what. If you buy a model from Palm, they get your money. If you buy from Sony, they still get some of your money and you send them a message that you want a higher resolution screen or built-in music playback.
So the best thing that you can do to improve the Palm Platform is to find a model that suits you and buy it, no matter who makes it. It's almost like democracy except that we vote with our dollars. On the other hand, maybe its closer to democracy than I'd thought...
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