Why Palm is Going to be a Smoking Husk in 24 Months

[Jason Dunn]

I promised I'd elaborate on this, so here we go. A few days ago (10/19) I pointed you towards Jeff Kirvin's site that had a Palm rep talking about their road map for the next two years. Palm has this strange multiple-personality disorder going on - they keep saying that people want "simple" and mocked the Windows CE units that had colour, MP3 players, etc. But then they added colour, and are always pushing for new hardware add-ons like the Kodak digital camera, etc. Palm is confused. But what makes me think Palm is more than confused are their plans for the future.<br /><br />First, no significant upgrade in processor power until 2002. Let's see, that makes it about five years that they will have used the same processor? I don't consider jumping from 20mhz to 33mhz a true processor update. Sure, most Palm apps are fairly fast on the 20mhz processor, but when you look at the Palm IIIc and the speed of apps launching, you see how limiting their current processor line-up is. Now let's talk resolution - because Palm set their sites so low (160 x 160), they've admitted that they're effectively crippled themselves from releasing a high-resolution unit because all the apps out there would break. Palm often brags about their "thousands of apps" - but all of a sudden these apps are a liability to progress rather than a benefit to them.<br /><br />The battery life of a Palm IIIc is worse than any Pocket PC on the market - and that's with a processor that's much, much slower than that of an iPaq or Casio unit. What happens when the throw in a faster processor? Although the StrongARM (See? I've already forgotten the new name) processor is very power efficient, I'm pretty sure it uses more power than the 33mhz Dragonball processor. Palm has to spend some serious R&D bucks on improving their power use. And they need to stop lying to their customers - look on the Palm site under the IIIc section and you'll find they claim the IIIc will last for "2 weeks or normal usage". The used to have information on their site that said something like "30 seconds of use eight times a day is average use", but I can no longer find it. I don't know about you, but I use my Pocket PC a lot more than eight times a day, and for a lot longer than 30 seconds per time!<br /><br />What Palm could do is release a 206mhz StrongARM processor-based unit with a 320 x 240 resolution screen and have an emulator that would natively run older Palm apps. But, in most cases, emulators are ugly hacks that confuse users with a disjointed UI. And hey, with hardware like that, they'd be making a Pocket PC, and their price advantage would go up in a puff of smoke, just like their market share will do in the next year...<br /><br />Palm could have had more than 24 months of life if they would have resigned themselves to being the bottom to mid-range of the PDA world, battling it out with PDA giants like DaVinci (haha!), and keeping to the greyscale market locked up. In that market, they'd have perhaps 48 months, and then their entire user base would realize that they wanted something more than a PIM tool.<br /><br />With the IIIc they're trying to break into a market that the Pocket PC is redefining every week, and they're going to get pummelled. It will take some time, but Palm has set themselves up for failure, and a big can o' whup-ass delivered courtesy of the Pocket PC. Palm has the lead, but not for long...

[KyleC]

It has been more than 24 months, and Palm, although not as popular as it was before, is still in the black. The "smoking husk" vision of Palm was a tantalizing vision for Microsoft and us, but Palm is far from "smoking." With de Zire and the Tunsten, Palm is once again on the map. However, if someone had told you when this article was published that Palm would have 144MHz processors, headphone jacks, and recording capabilities you'd think I was nuts. Palm? With the capabilities of a Pocket PC? I must have lost my marbles...

[Kirkaiya]

Palm may not be a "smoking husk", but they've been thru a trial by fire, and are a little singed.

If Jason had predicted 2 years ago that Palm would be forced to break itself into 2 companies (hardware and OS), and that the keeper of the crown jewels (PalmSource) was going to be deeply in the red by October 2002, we might not have believed that either.

I think Palm was slow to react to Microsoft and the PPC OEMs, but in the end, they reacted fast enough to stave off death in the mid-range. Their top-selling unit is probably now the Zire, however, a $99 unit (which I've seen discounted to $90). The profit margin on 1 3900-series iPaq is probably more than $90 for HP/Compaq.

I haven't seen any numbers for the Tungsten - it's a slick device, I played with one at CompUSA, but it's pretty overpriced (again, though, I've seen the rebates starting for it as well).

Palm Inc's revenue is shrinking quarter-over-quarter, and their last published quarterly results (from August, granted) showed a loss, pre-tax, of 33 million (post tax was a loss of 258 million USD).

Hopefully (for them) the 4th quarter was better, with holiday sales - but man, they are hemorraging money. I think if they can't turn things around, they'll be back at the blood-bank-of-Sony for another transfusion of some cash...

We'll see. I don't want to see Palm die, but man, they are SLOWWWWW to respond to an agile, hungry competitor (ie., the Goliath MSFT).

[spg]

Wow, these replies are spread out in date. But anyway, back on topic -

I agree with you Kirkaiya. I like Palm's products to a point, they are great for entry level PDA work (although the PPC is catching up in that category). Palm's problem is just that they haven't been responding to the market demand for more features. At the beginning of the year we had all the hype about Palm OS 5, and just recently have we actually seen a device using it!

I don't want to see Palm die, but they are going to get into deeper and deeper trouble if they don't pickup the pace a bit.