palmOne: No more high-end PDAs in future

[Colin Dunstan]

The Independent was able to chat with palmOne chief Ed Colligan, uncovering some more interesting information on what we might expect from palmOne in future.

Read closely the three following quotes from the article (I marked the important parts in bold):

These changes [enhancements of the Treo 650], Mr Colligan believes, will help PalmOne to compete with manufacturers such as Sony Ericsson and Nokia, as well as persuading existing Palm users to switch to a smart phone.

"The PDA market has been flat to declining," he says. "But I look at the mobile computing and communications business and see that growing rapidly. We are cannibalising ourselves. If PDA sales are shrinking, it is because we have a smart phone business."

The low-end market [of PDAs] is one where Mr Colligan believes he can make money - and where the competition struggle.

Mark my words: There won't be any high-end PDA from palmOne anymore. Not today. And not in a year. Colligan CLEARLY says so himself. He says he wants his (btw shrinking) customer base turn towards smartphones. He says there cannot be place for both, PDAs and smartphones, and without doubt he is in favor of smartphones. And lastly, to avoid spreading rumors that palmOne is completely abandoning the PDA market he mentions that the low-end sector is still of his interest.

So only a shift in strategy?

I suspect there is more what Colligan is not telling us. Notice that palmOne has had some serious distribution problems. In Europe, you'll hardly find anyone on the streets with a Treo in his hand. Colligan says there was a problem of over-supply; but he fails to explain why his only European partner is UK Orange so far, and what he could do to win other important alliances with European phone network companies. This just doesn't sound right. And if palmOne is really focusing on, I quote, "mobile computing and communications", why then did they decide to release a Tungsten T5 without WiFi?

[Bob Russell]

I haven't read all this yet, so my comments are based mostly on previous info, but I get the feeling (from hearing him on an earnings conference call) that there will be a Tungsten line going forward. Unless the OS6 problems caused them to rethink.

The idea is that they can make money off low-end PDAs and off smart phones, just like you've indicated.

But where I think there's hope is that until smart phones have high-end capabilities and features, they'll keep the high-end PDAs around as another means to bring users into the Treo product line. The idea is that they buy a Tungsten E or T and they love it. They get used to PalmOS. And then, in the thinking of PalmOne, they "come to their senses" and realize they would really rather have a Treo with a smaller screen and less memory and an expensive monthly contract and a shorter battery life and more bulk and, oh yeah, a cell phone that you don't ever want to lend to anyone because it has your life on it!

No matter how much the market gurus think smart phones will replace almost every PDA except the cheap ones, they can't really make that happen unless the consumer base likes the things executives think they like. It's one thing to think you know what a customer wants better than they do. It's another thing to be right and make it work.

So, we'll see. My bet is that until smart phones are about the same form factor and specs as traditional PDAs for about the same price, we'll see the good ole traditional PDA on the market. 'Course if PalmOne thinks they know better, I suppose they could leave the whole market to Dell, HP et al.

Every bit of new coming out these days tends to make me all the more happy I switched to PPC. I really don't like what I see from Palm these days. I hope they get it together because they've got a great OS. It deserves better products, and a brighter future!

[Laurens]

Thanks for posting the link. However, to be honest, I think you're reading too much into this. Nowhere does the article say high-end PDA's are out:

Despite PalmOne's ambitions for the smart phone market, the company is not turning its back on standalone PDAs. In fact, the low-end market is one where Mr Colligan believes he can make money - and where the competition struggle. PalmOne has sold over three million of its basic handhelds, called Zires. "A huge percentage of buyers have never owned a PDA or digital device." Mr Colligan says. He hopes they will trade up to more powerful models later.

I consider it highly unlikely that those Zire21/31 users will, all of a sudden, make the jump to a SmartPhone. They might be inclined to upgrade to a more expensive, capable PDA such as a Zire72 or a T|E or maybe even a T|T, but not a Treo.

OTOH, looking at the uninspiring T|5, it does indeed seem as if PalmOne is no longer interested in the high-end market. The mid-range T|E has been their best-selling model so far, so they might plan to focus their efforts on this market segment.

[Colin Dunstan]

You're right the article doesn't say it explicitely, nor would Colligan be wise to do so, but everything he has said so far pretty much cancels out the possiblity for future palmOne high-end PDAs.

Remember we are talking about palmOne here, not Dell or HP. When palmOne brings out just ONE new device, it is a big thing; on the other hand, Dell or HP (or even Sony in the past for that matter) have sufficient R&D resources to ship at least one new device every 3-4 months. So if Colligan wants to focus on Smartphones and low-end PDAs, and at the same time says the mere focus on PDAs would cannibalize the market, it is obvious (at least to me) that palmOne simply cannot with its given resources do more but abandon the high-end PDA sector.

Let me add a poll to this thread - I'd be interested to know what the majority here thinks!

[mercedes]

I want the best of both worlds. I want a really nice PDA with Wi-Fi and a compact phone with long battery life. I don't mind carrying both. Smartphones are just a compromise because you can't have a big screen and be small at the same time. Besides they are very expensive and take longer to come to market since PalmOne is dependant on the carriers. I use my pda more than my phone, by the time I get to make a phone call, I would have probably used up all the battery reading ebooks.

[Alexander Turcic]

Morpheus I only hope that you are not right. Every statistic today tells us that smartphones make the future; yet, why is it that I would hate to miss my PDA?

[Jeff Kirvin]

Because WiFi does not a high end handheld make. I've said it before and I'll say it again: Bluetooth and a 3G cellphone make WiFi obsolete. Notice that all of the PalmOne top-end devices (Treo 650, Tungstens T3 and T5, Zire 72) have Bluetooth. I think PalmOne realizes, moreso than the general public, that no one solution is perfect for everyone. I have absolutely no interest in buying a smartphone. I've owned two, and convergence requires too many compromises. In fact, even though I've got 1.3GB in my Tapwave Zodiac, most of that music for while I write, I'm seriously considering ditching the music, loading up my 1GB card with as many ebooks as I can, and buying an iPod for music and Audible. That means I'll have four devices to carry (Zod, keyboard, phone and iPod), five if I continue to carry my headphones in a retracting case. But each device will do what it does nearly perfectly, no compromises.

In a sense though, Morpheus is right. PalmOne will not be releasing a "technology demo" high-end handheld a la the HP hx4700. They're more focused on providing solutions, not gadgets.

[doctorow]

Jeff I am not dependend on WiFi either, so for my purposes, you are absolutely right: WiFi does not a high end handheld make.

The point is that while the T5 doesn't have WiFi, it also doesn't have a cradle, nor a metal case, nor vibration alarm, nor a LED for charging status, nor a voice recorder... all extra features I don't necessarily need; yet features that were available in previous top P1 PDAs (e.g. T3). I don't understand why P1 decided to make the T5 "less" while at the same time selling it as their new top model. How can they justify having a top of the line PDA and not even include a cradle?!

What scares me is that it took P1 WAY TO LONG to bring out the T5 on the market. The longer it took them, the higher the expections were set by PDA enthusiasts. It is just natural that we were deeply disappointed when we heard that the T5 was still running with OS 5 (OS 6 has been available to developers for almost a year!). And while WiFi is indeed not of everyone's interest, P1 could at least have thought of releasing two variants of the T5, one with and one without integrated WiFi.

It seems P1 is moving all their operational resources toward a Treo environment. The T5 was merely a side-product using old and "proven" technology. The future belongs to smartphones - at least if you ask Ed Colligan, as depicted in Morpheus' article.

[Jeff Kirvin]

Most of the omissions in the T5 make sense if you consider the intended usage. The T5's biggest new feature is Drive Mode, which requires a connection to the PC. Including a cable is a far more portable and practical way to do this than a cradle. Who wants to lug a cradle with them on a trip, or even around the office? But a cable isn't a big deal. The T5 is about mobile access to information, any and all of your information, and the cable fits this use better than a cradle.

Same thing goes for the plastic casing. While I have no doubt that it's also cheaper (higher profit margin for PalmOne), it makes the device lighter. I've read several user reports that noted that although the difference in weight between the T3 and T5 doesn't look like much on paper, the T5 feels significantly lighter in person. Lighter == enhanced mobility.

Some of the other things I don't understand. Losing the vibrating alarms and charging LED were dumb moves, probably done to cut costs. Although I wonder how much the vibrating alarm contributed to digitizer drift on the Tungstens T1-3.

My point is that while HP and Dell are in an arms race to see how many widgets they can cram into a PDA, just going down the list of features and checking them off, PalmOne is taking a more holistic approach. They're not designing PDAs thinking "this is our high end unit, with all the bells and whistles." They're looking at a type of user, and thinking, "what can we build that will make this person's life easier?" I should note that this was the kind of thinking that made Sony great under founder Akio Morita (when they invented the Walkman, the color TV, the portable TV, etc.) and that Sony doesn't do anymore, leading to the failure of the Clie and Sony's eclipse by Apple in the portable music arena. Companies that build to users rather than build to features tend to be more successful in the long run.

[doctorow]

Originally Posted by Jeff Kirvin

My point is that while HP and Dell are in an arms race to see how many widgets they can cram into a PDA, just going down the list of features and checking them off, PalmOne is taking a more holistic approach.

I should note that this was the kind of thinking that made Sony great under founder Akio Morita (when they invented the Walkman, the color TV, the portable TV, etc.) and that Sony doesn't do anymore, leading to the failure of the Clie and Sony's eclipse by Apple in the portable music arena. Companies that build to users rather than build to features tend to be more successful in the long run.

Well said, I see your point! Let's hope you are right.

[doctorow]

Originally Posted by Morpheus

but he fails to explain why his only European partner is UK Orange so far, and what he could do to win other important alliances with European phone network companies.

Seems the competition is doing better winning new alliances:

BT's mobile arm has signed on to offer its customers Research In Motion's BlackBerry products.

The MVNO (mobile virtual network operator) will sell two joint BT and BlackBerry branded handhelds to its corporate customer base - the BlackBerry 7230 and the BlackBerry 7730 - which come with all the usual corporate-focused applications, including push email, web browser and calendar.
Although BT claims it’s the first MVNO in Europe to add BlackBerrys to its portfolio, the big four UK operators all sell a model of the handheld emailer.
According to analyst house IDC, RIM now has seven per cent of the handheld market, with 121,260 device sold in the third quarter of this year - a 304 per cent rise on its performance in the third quarter of 2003.