Sunday, February 17, 2008

Palm's Identity Crisis

Handheld electronics include several distinct though related devices: cellular phone, personal digital assitant (PDA) and the hybrid smartphone.

The convergence of a cellular phone and PDA makes sense, since they both share common data - the contacts. It's also easier to carry one device rather than two.

A robust operating system provides a platform to converge additional devices we may want to carry around - mp3 player, gps, etc... why carry a cell phone, a PDA, an mp3 player, a digital camera, and gps receiver in separate devices if we can do it all in one?

Some people are more inclined to identify with their cell phone, and additional components are driven off that form factor. Some identify with a PDA and its related functionality, and additional components are driven off that form factor. As an example, there are lots of people using a cell phone who have never used a PDA to keep track of appointments, to-do lists, etc... by default, their cell phone will contain at least their contacts names and phone numbers, but probably not birthdays, or notes, etc... By the same token, there are people who were using PDAs before cell phones became ubiquitous, and it only seemed natural to lose the clutter and converge their phone and PDA functionalities.

Palm was a PDA innovator. A close integration of operating system and handheld hardware made it simple and intuitive. A large 3rd party developer community grew providing variety in software choice. And everything was wonderful.

But cell phones continued to penetrate the consumer space, and new generations of electronic device buyers bought cellphones before becoming interested in PDAs. Palm threw phone functionality into their PDAs, but didn't do it well. Currently, their performance in customer satisfaction is in the basement, according to the article Palm Ranks Last in Cellphone Satisfaction.

The sad part is, Palm apparently missed Danny DeVito as Larry "The Liquidator" Garfield in Other People's Money, when he said "the best way to go out of business is to gain increasing market share in a decreasing marketplace." Palm is doing exactly that - PDA Market Continues Contraction, Palm Remains on Top.

Convergence is here to stay. It would make more sense for Palm to stop alienating its core users, who are "PDA first users who converged with a phone just to carry one less device", rather than cell phone first users who may still not appreciate the usefulness of a PDA. It would make more sense to devote more resources in making a converged device more stable, more reliable, more in touch with what's going on with its competition. Continuing to push non-phone converged PDAs does not make sense. Continuing to frustrate its core users with tired PDA functionality and poor phone integration does not make sense.

Why this pioneering company can't figure this out also makes no sense. Maybe Larry Garfield should show up at their next stockholders' meeting and take over.