Winning strategy for Palm – A Proposal
         Management of Technology MNGT 463

                      Prof. Shane Green...
Table of Contents

1 INTRODUCTION............................................................................................
1 Introduction
Paris, 2002: As a Finnish business traveler strolls along the river Seine, her streaming audio feed is
inte...
•    Vertical Application Devices - VADs are application specific SHDs typically made specifically
     for a particular b...
According to Robertson Stephens, on a global basis, smart phones are likely to outstrip basic and
browser enabled handsets...
2.3.1    Palm’s Designs – Table 1

Device            List     Target Market      Connecti     Form Factor       Applicatio...
2.3.2    Competitive Designs – Table 2

Device          List      Connectivity        Form          Applications &        ...
connection speed and limited availability in supporting applications. The move to the faster GPRS
standard may reduce cust...
and become avid users. RIM has recently introduced their 957 wireless handhelds. This handheld is
being tested by users in...
Scandinavia is probably one of the first markets in Europe where mobile shopping solutions have
emerged. Constraints like ...
either use keypads or pen styluses. Early adopters are more tolerant to these shortcomings that are
exhibited by rudimenta...
Predicted requirements for mass market
So much for the visionary, but the Pragmatist values ease of use and speed of conne...
3.2.3   Technology platforms

Palm's Operating System (Palm OS) is currently the most widely used OS in the handheld marke...
3.2.4   Content and 3rd party applications

Common personal information management (PIM) solutions include address book, c...
3.2.5   Pricing and Revenue Models

          Currently subscribers of cellular phones are receiving equipment for free, b...
Predicted requirements for mass market
•   SD may enhance the use of Palm SHDs for sales force automation and customer rel...
4 Strategy for Palm
4.1Product roadmap

We suggest a product roadmap for Palm in order to capture the mass market for SHDs...
R380. Palm needs to work with wireless service providers to figure out how content can be delivered
over the existing Palm...
•   Build on its initial strength – simplicity and elegance. Continue to apply its rigorous design
    philosophy and aest...
Marianne Wolk, (June, 2000), “Wireless Data: The New Economics”, Robertson Stephens
Technology Research
Marc A. Cabi, (Jul...
Upcoming SlideShare
Loading in...5
×

Introduction.doc

464

Published on

Published in: Technology, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
464
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
6
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Introduction.doc

  1. 1. Winning strategy for Palm – A Proposal Management of Technology MNGT 463 Prof. Shane Greenstein Fall 2000 Deepa Bhaskaran Tushar Dhayagude Rahul Kamath Zeev Klein Allister Lundberg Goro Takeda
  2. 2. Table of Contents 1 INTRODUCTION..............................................................................................................................................................1 2 INDUSTRY ANALYSIS....................................................................................................................................................2 2.1 VALUE CHAIN.................................................................................................................................................................2 2.2 MARKET GROWTH............................................................................................................................................................2 2.2.1 Size and Growth....................................................................................................................................................2 2.2.2 Market Trends.......................................................................................................................................................3 2.3 CURRENT DESIGNS...........................................................................................................................................................3 2.3.1 Palm’s Designs – Table 1.....................................................................................................................................4 2.3.2 Competitive Designs – Table 2.............................................................................................................................5 2.4 COMPETITIVE LANDSCAPE IN EUROPE.................................................................................................................................5 2.5 CURRENT REVENUE MODELS...............................................................................................................................................7 3 PRODUCT EVOLUTION.................................................................................................................................................8 3.1 MARKET PENETRATION AND DIFFUSION.................................................................................................................................8 3.2 MASS-MARKET PREDICTIONS.............................................................................................................................................8 3.2.1 Form factor...........................................................................................................................................................8 3.2.2 Connectivity protocols (incl. Infrastructure, standards, etc.)..............................................................................9 3.2.3 Technology platforms.........................................................................................................................................11 3.2.4 Content and 3rd party applications ..................................................................................................................12 3.2.5 Pricing and Revenue Models..............................................................................................................................13 3.2.6 Accessories/Companions....................................................................................................................................13 4 STRATEGY FOR PALM ...............................................................................................................................................15 4.1 PRODUCT ROADMAP........................................................................................................................................................15 4.2 STANDARDS...................................................................................................................................................................16 4.3 GROWTH STRATEGIES .....................................................................................................................................................16 5 BIBLIOGRAPHY.............................................................................................................................................................17 BOOKS AND ARTICLES .........................................................................................................................................................17 PALM INC., (2000), “THE 2ND STORY: BUILDING ON SUCCESS-PALM’S EXPANSION STRATEGY”, PALM INC. WHITE PAPER ............................................................................................................................................18 WALTER S. MOSSBERG, (NOVEMBER 2000), “MINIMIZE YOUR DIGITAL CLUTTER WITH HANDSPRING VISORPHONE”, THE WALL STREET JOURNAL..........................................................................18 WALTER S. MOSSBERG, (NOVEMBER 2000), “SPRINT ATTEMPTS TO ADD ORGANIZER TO CELL PHONE”, THE WALL STREET JOURNAL..................................................................................................................18 WEBSITES...........................................................................................................................................................................18
  3. 3. 1 Introduction Paris, 2002: As a Finnish business traveler strolls along the river Seine, her streaming audio feed is interrupted by a video call from her boss, who wants her to meet with a client on the other side of the city. Instantly, her mobile phone displays a map and timetable of subway services to the client's office location, and offers her the option to buy an electronic ticket or call for a cab. Meanwhile, a visitor in New York City fumbles with a bunch of quarters in his pocket to call his voicemail at home base. As we look beyond our own borders, a number of factors are playing into the proliferation of the connected wireless handheld in Europe that deem further study at Palm, Inc. The goal of this paper is to suggest a product strategy and roadmap for the smart handheld market in Europe over the next three years to the product management group of Palm, Inc. To achieve our goal, we analyze the present ecosystem and apply Moore’s Diffusion and Rosenberg’s Uncertainty frameworks to identify the market and technology drivers for this product category and offer an assessment for the product's evolution. Before we analyze Palm’s European market, it is imperative to describe the smart handheld devices (SHDs). In terms of the ease-of-use, cost and administrative requirements, SHDs represent attractive alternatives to laptop computers for mobile workers. Further, the wireless internet platform will act as a springboard for many enterprise and personal applications. SHDs have been broadly classified into three categories: PDAs, smart phones and vertical application devices. • Personal digital assistant (PDAs) - PDAs have become synonymous with Palm devices. A PDA is a SHD that combines Personal Information Management (PIM) utilities such as phone books, calendars, calculators, mail management tools onto a single platform. • Smart Cellular Phones - Smart phones are the generic title for digital phones on wireless networks that have the capability to browse the internet, send and receive faxes, SMS (Short Messaging Services) and email. High-end smart phones like Nokia Communicator have a palmtop and digital phone in a single unit with the ability to link seamlessly with PCs, printers and the internet. Winning Strategy for Palm – A Proposal Page 1 of 17
  4. 4. • Vertical Application Devices - VADs are application specific SHDs typically made specifically for a particular business such as Fedex or an industry like Airline/Aviation. 2 Industry Analysis This section looks at the current ecosystem of the smart handheld market in Europe. 2.1Value Chain All components of the value chain are vital for Figure 1 Value Chain Application Building creating a mass market for the SHDs. The Blocks Technology Infrastructure technology infrastructure providers, content Platform Equipment Application Platform Vendors Vendors Vendors providers and information appliance Information appliances Silicon Smart Device Network operators/ manufacturers must work in unison building Technology Companies Device Companies Enabling Software Wireless carriers Content providers blocks such as location based services, voice Content Content Mobile Portal Providers Aggregators portals, encryption, SMS, etc. Technology Providers infrastructure providers include companies Wireless Consumers such as Nokia, Ericsson, Motorola, Lucent and Nortel whereas content providers include Yahoo, AvantGo, Oracle Mobile, Vindigo and iobox. 2.2Market Growth 2.2.1 Size and Growth The European boom in the mobile wireless market is poised to explode in the near future. The demand for SHDs is growing in leaps and bounds as well. Much of the momentum is driven by the fact that mobile handset manufacturers are coming closer to the traditional PDA manufacturers, as they begin offering smart phones and communicators with the combined functionality of both. # of Devices Figure 2 - Worldw ide Grow th of sm art Shipped Figure 3- Smart Handheld Shipments in Western Europe 7000 phones 900 6000 800 Smartphones 700 5000 600 500 4000 400 Shipment 300 Basic 3000 s 200 brow ser 100 enabled 2000 0 phones 1000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year Winning Strategy for Palm – A Proposal Page 2 of 17
  5. 5. According to Robertson Stephens, on a global basis, smart phones are likely to outstrip basic and browser enabled handsets by 2005, creating a global installed base of ~800 million devices with in the next decade (See Figure 2). The market for SHDs in Europe has grown steadily this year and is expected to more than triple by 2003. International Data Corp. (IDC) predicts that about 6.3 million such devices will be shipped in Western Europe in 2003 resulting in revenues in excess of $3.7 billion (See Figure 3). This growth in Europe can be attributed to the appetite of Europeans for communication gadgets and the effectivness of the GSM standard. 2.2.2 Market Trends Although the smart handheld industry has exhibited steady growth in 1997 and 1998 years, 1999 proved a turbulent year for SHDs. There were several partnerships, initiatives, failures and emergence of new technologies. In general the trend is towards convergence of the features of the cellular phones and the personal organizers. There are six areas where there is tremendous thrust: • Increased Processing Power – Advances in microchip technology will enable speed as well as enhance integration of these into single circuit boards. • Connectivity - Europe has built phones and palm-sized devices based on a standard communication protocol, GSM. Manufactures are going to standardize on the much-faster GPRS, which is the next incremental improvement based on the GSM network. • Additional Applications – More and more content providers are providing wireless connectivity to their continent and applications using WAP, WML and other technologies. • Audio Upgrades – Audio input and output capabilities including voice and music transmission and reception are becoming a major trend in the device convergence. • Display Upgrades – Need for larger screen space is driving the new form factors but there is a design tradeoff between size, weight and price of the device. • Synchronization between OS platforms and devices – Growth of mobile computing is increasing the need for data synchronization with other devices like laptops. 2.3Current Designs To analyze the evolution of this product category, we study the current designs prevailing in the market. Winning Strategy for Palm – A Proposal Page 3 of 17
  6. 6. 2.3.1 Palm’s Designs – Table 1 Device List Target Market Connecti Form Factor Applications Technology Price vity & Platform Accessories Palm IIIe / III $149 / Price conscious No 4.7" x 3.2" x PIM Palm OS xe $249 businesses 0.7" 3rd party apps looking for full 6oz MP3 player device Large Screen Digital camera functionality approx. 15 Digital lines recorder Portable keyboard Palm m100 $149 Early majority – No 4.66" x 3.12" x PIM Palm OS busy consumer 0.72" 3rd party apps 4.4 oz. Clip on Smaller Screen faceplates Palm V $299 / Early majority – US Yes – 4.5" x 3.1" x See Palm IIIe Palm OS 399 busy but not in 0.4" PIM professional Europe 4 oz Entertainment Large screen 3rd party apps Palm VII / $399 / Innovators – US Yes – 5.25" x 3.25" x See Palm IIIe Palm OS VIIx – NOT 499 consumers who but not in 0.75" Online e-mail OFFERED need to be Europe 6.7 oz Imessenger IN EUROPE connected Large screen PIM Entertainment M-Commerce OmniSky $99 & Clip on sled to Email Modem $40 / Palm / Visor / Web NOT month CE Palm.net OFFERED IN EUROPE Winning Strategy for Palm – A Proposal Page 4 of 17
  7. 7. 2.3.2 Competitive Designs – Table 2 Device List Connectivity Form Applications & Technology Price Factor Accessories Platform Handspring - $149 US Yes – but not 4.8" x 3.0" -PIM Palm OS Palm OS Visor $249 in Europe x 0.7" -3rd party apps 3.1 Visor Delux $299 5.4 oz -MP3 player Platinum $449 -Superior digital (Faster) Color - camera Prism (Color) 4.8" x 3.0" -Digital recorder x 0.8"; -USB connection 6.9 oz -GSM enabled Visorphone -Other clip-ons Psion Revo $399 Yes – but 6.1 x 3.1 x -PIM EPOCH GSM Plus requires GSM .6 -keyboard plug-in modem 7 oz -SMS to phones -available in French, English, German RIM – $499 Yes – just 4.6 x 3.1 x -PIM Pager Pager Blackberry entering UK, .7 -always connected 957 partner with BT 5.3 oz -keyboard CellNet this year 20 line screen! Nokia 7110 $200-30 Yes – GSM 4.9 oz, -predictive text Nokia GSM 0 enabled 14.4 5-8hr. talk makes easier entry kbps time -IR for sync. -some games 2.4Competitive Landscape In Europe Palm has competition from two categories of players in Europe – the wireless phone manufacturers like Nokia and Ericsson, and the palm-like device makers like Psion, Handspring and RIM. In the phone category, Nokia and Ericsson, with significant operational experience and brand recognition in Europe, are strong competitors for Palm. Nokia introduced an WAP-enabled phone, Nokia 7110, which failed due in part to a tiny screen size and a slow connection at 14.4kbps. However, Nokia’s new model, Nokia 9210 Communicator, has a larger screen and works at 43.2 kbps. Nokia’s rival, Ericsson, also introduced a model with a similar design, R380, based on Symbian’s EPOC OS. Both companies are trying to create consumer enthusiasm about smart phones and to grab initial market share. As of now, consumers are not happy with a relatively slow Winning Strategy for Palm – A Proposal Page 5 of 17
  8. 8. connection speed and limited availability in supporting applications. The move to the faster GPRS standard may reduce customer uncertainty and allow for economies of scale and scope. In the palm-sized device category, Palm is one of the lead players with competitors including Handspring, Psion and RIM. Palm has not introduced a single connected Palm device in Europe. In the US, Palm has the Palm VII, a PDA with wireless Internet access and the Palm Vx with either a clip-on modem or OmniSky modem. Palm VII is slow, costly, delivers only selected Web content and has limited email facilities. Besides, Palm VII cannot work outside the U.S. since it works only on the BellSouth communication protocol. Palm Vx comes at a premium price and ruins the thin- and-light form factor. As an intermediary solution, Palm is launching software in Europe that enables users to connect their devices to the Internet using a data-enabled mobile phone, either via infrared or a cable to the Palm. It also announced its introduction of a cell phone sled from RealVision for Palm V and a plan to launch a clip-on GSM unit for all Palm devices in early 2001. A year ago, Palm announced a joint development effort with Nokia to create a new penbased product that runs on both Palm and Symbian platforms, but as yet nothing has been introduced. In the US, Handspring has just introduced the VisorPhone, a Palm OS based PDA combined with voice calling and wireless data capability. The Visor uses GSM and should be relatively easy to modify for the European market. Though Palm earns license fees on Handspring sales, the majority of Palm's profits come from selling their devices. Psion devices, which are very popular in Europe, are currently designed to accept mobile GSM modems and are therefore significantly ahead of Palm. Additionally, they have modified their applications for different European languages. Psion is based on the EPOCH operating system, which is a competing operating system to the Palm OS. Losing to Psion will result in Palm losing both devices and license revenues. Research in Motion (RIM) makes two-way pagers and has recently entered the palm-sized devices market. Their devices are designed for email, and their keyboard designs allow for fast data entry. Without significant marketing, loyal groups of connected professionals have adopted their devices Winning Strategy for Palm – A Proposal Page 6 of 17
  9. 9. and become avid users. RIM has recently introduced their 957 wireless handhelds. This handheld is being tested by users in the UK, thus giving RIM a lead over Palm. 2.5Current revenue models Palm’s current sources of revenue include device sales (Palm handhelds), Palm OS licenses (to other Palm-based device makers like Handspring, Kyocera, Nokia, Sony, Symbol Technologies, and TRG Products), Palm.net service plan fees and Enterprise solutions for the Palm platform. Of these, the device sales account for 78% of revenues. As SHDs become a mature market, Palm may have to use new revenue streams in order to capture value. Some of the other revenue models in vogue in Europe and Japan are: 1. Revenues from Content and Interactive Service providers – Until wireless content and information is commodified, SHD manufacturers can secure payments from mobile content providers (as NTT DoCoMo does today). Small screens and a highly competitive market will keep these payments high. Over time, the balance of power may shift from the device manufacturers to the content/service providers, similar to today’s cable television networks. 2. Premium Personalized Content - Small fees for valuable, personalized, timely content may meet with consumer acceptance, either billed directly (as in weather.com's SMS/paging-based service) or bundled into a carrier's monthly bill (for an i-mode offering). 3. Revenues from advertising and sponsorships – Potential for advertising will expand with location-based services. Mobile screen and navigation limitations as well as the way content is delivered as part of a deck of related pages will also make users less likely to respond to an advertisement on their handset. 4. Subscriptions – Providers must upgrade their infrastructure to enable providers of premium services to garner revenues via subscription and pay-per-play models. 5. Commerce transactions - Similar to content services, commerce services that succeed will take advantage of the context of time or mobility. Merchants can, therefore, capture ubiquitous orders whenever or wherever a consumer's desire to purchase arises. Winning Strategy for Palm – A Proposal Page 7 of 17
  10. 10. Scandinavia is probably one of the first markets in Europe where mobile shopping solutions have emerged. Constraints like finite bandwidth, limited GUI, metered access costs and the lesser computing power of the devices may slow the progress 3 Product Evolution The above industry analysis gives us a good background to predict how the market will evolve over the next three years. But before we provide a strategic framework for Palm, we will evaluate the market penetration and diffusion in terms of Geoffrey Moore’s framework. 3.1Market penetration and diffusion We believe the smart handheld market is currently at the "early adopter" stage in Europe: 1. There is no one standard or dominant design that drives the industry. 2. Prices are relatively high for both the devices and the wireless access. 3. Applications for the devices are still evolving. 4. Competition from many players, with most of the designs still evolving. 5. Customers are primarily niche (sophisticated, tech-savvy business users). 6. Devices are too complicated for use in mass market – data entry complexity, synchronizing capabilities, etc. 3.2Mass-Market Predictions Geoffrey Moore’s framework helps us predict the mass-market characteristics for SHDs, specifically for the early majority. In conjunction, we use Rosenberg's framework to analyze uncertainties related to those mass-market projections. 3.2.1 Form factor Currently available WAP phones are large, clunky, unreliable and expensive. Their screens are small, hard to read and are typically menu driven. Data entry is cumbersome and requires users to Winning Strategy for Palm – A Proposal Page 8 of 17
  11. 11. either use keypads or pen styluses. Early adopters are more tolerant to these shortcomings that are exhibited by rudimentary SHDs such Palm VII. Predicted requirements for mass market The early majority, whom Moore refers to as Pragmatists, would want features that enhance their experience. Such features may include: • Larger screens: As richer applications are offered over handheld devices, consumers may require larger screens, e.g., browse the internet, play games and read/send email. • Making 'em Small and sleek: As people begin to expect "anytime, anywhere" access, elegant, small-sized, lightweight devices with long battery lives will do best. • Being Vocal: Data input mechanisms will have to be easier to use. Data entry using voice browsers using voice recognition technologies may be preferred over keypads or stylus pens. Uncertainties • Emergence of a dominant form factor is unclear: Customer preferences for the form factor, and the evolution of enabling technology is uncertain. The likelihood of Palm's VII versus Nokia's Communicator 9000 design emerging as the preferred form factor remains to be seen. • Tradeoffs have to be carefully managed to minimize costs: Larger screen sizes and longer battery lives may warrant other considerations of space and cost. Palm should not lose sight of the big picture in terms of controlling costs and managing device real estate. 3.2.2 Connectivity protocols (incl. Infrastructure, standards, etc.) Currently Western Europe has the highest penetration of cellular phones in the world with GSM as the ubiquitous standard. Palm has recently announced collaboration with Motorola to develop a cell phone accessory that will utilize GSM technology. Although penetration is currently very high, GSM is a first generation voice driven technology and is unsuitable for high-speed data transfers. Early adopters are typically visionaries, in this case likely busy professionals who would find professional applications for Internet connectivity if made available ) But GSM is not a packet switching based technology, which is absolutely crucial for the applications that will drive the adoption in the mass market. Initial trials are currently underway in Finland with 3G technologies, which promises wireless access speeds that are at least as competitive as fast-wired modem connections. Winning Strategy for Palm – A Proposal Page 9 of 17
  12. 12. Predicted requirements for mass market So much for the visionary, but the Pragmatist values ease of use and speed of connectivity, rather than the simple satisfaction that such connectivity exists. To the pragmatist: • Higher bandwidth wireless technology: is vital for critical applications and for bandwidth- intensive applications like video-conferencing and music downloads, which will drive mass market. This can be supported only if EDGE or w-CDMA is adopted by 2003. • Worldwide adoption of at least 2.5G: is important since it allows the devices to perform globally. The Pragmatist will not be enticed to buy devices specific to one standard. • Providers must ensure that travelers can get uninterrupted service without losing data. Uncertainties • Although migration towards higher generations is in progress, the migration path is unclear. • Currently auctions for 3G licenses in Europe have fueled negative sentiment over the ability of the carriers to make money, which has put the industry in a slump. • In the absence of full-fledged adoption of 3G technologies, there is widespread speculation that migration will occur from GSM to GPRS to EDGE to finally WCDMA. But none of the carriers are taking steps in this direction. All in all, primitive wireless technology capabilities and slow adoption of newer technologies have been the biggest sources of uncertainty. Figure 4 - Road Map for wireless IP-based services Voice Wireless Video Full-motion LAN-LAN High res. Telephony Modem Access Conferencing video Interconnection imaging 10 kbps 100 kbps 1 Mbps 10 Mbps 100Mbps Delay Times 28 mins 2 mins 7 sec 2.5G => EDGE (384Kbps) 1G => GSM (9.6kbps) 3G => WCDMA 2( Mbps ) Winning Strategy for Palm2G => GPRS (112Kbps) – A Proposal Page 10 of 17 1995 2001 2002 2005 NOTE: Figure is only representative. Not to scale.
  13. 13. 3.2.3 Technology platforms Palm's Operating System (Palm OS) is currently the most widely used OS in the handheld market, in fact more than 75% of the handhelds are based on it. But Palm does not have expertise in the connectivity stack protocol IP that is crucial to make a smart handheld device. Palm must rely on business partners such as Motorola and Omnisky to gain access to this technology platform. • Microsoft CE and Symbian are becoming forces to reckon with in the SHD market. • WAP and XML are gaining support from powerhouses like Nokia, Ericsson, Motorola and Phone.com. • The microchip technology currently cannot integrate the RF functions (required for cellular capability) and digital functions on to a single chip currently hindering an elegant form factor. To mitigate this, Palm recently announced a cell-phone add-on to its existing Palm V design. The technology savvy early adopter takes pride in mixing and matching as well as tinkering with the add-ons and standards, but the technology neutral pragmatist wants simplified convergence, compatibility and consumer appliance characteristics. Predictions for the future for Mass Market We believe that to make the smart handheld device appealing to the early majority: • All Operating system platforms should incorporate wireless APIs in their very structure. They will provide a connector-standard such as Handspring’s Springboard and Palm’s Secure Digital. • Advances in microchip technology are essential to integrate RF and digital functionality. This will drastically reduce the footprint of the printed circuit boards used in the SHDs. Palm is apparently in talks with Lucent, TI and Analog Devices to integrate these functions. Uncertainties Since the capabilities of the individual operating systems are yet to be proven for a smart handheld device, considerable uncertainty exists over which OS will dominate. In the event that Microsoft or Symbian OS dominates, manufacturers of SHDs will embrace them in lieu of Palm OS. Although WAP is a promising early-stage micro-browser protocol, newer technologies like XML which have broader appeal can eclipse WAP as the de facto wireless application protocol. This makes it difficult for Palm to embrace one protocol in addition to developing its proprietary web clipping API. Winning Strategy for Palm – A Proposal Page 11 of 17
  14. 14. 3.2.4 Content and 3rd party applications Common personal information management (PIM) solutions include address book, calendar, email and other personal data management tools. Palm also offers a web clipping platform from 3rd party software vendors that takes HTML code and translates it into the web clipping application format. Once this application is installed on a Palm OS platform device, content is delivered from the content provider's own web site as a subset of the HTML 3.2 standard. A repository of over 250 web-clipping applications offered conveniently through a content portal named Palm.net helps individuals customize their own experience as they see fit. Several providers such as Vindigo, AvantGo and Yahoo also deliver content. Financial services and airline booking are some of the other applications available. But though there are over 5,000 applications designed for Palm-like devices, most are not designed specifically for the "smart-handheld” market. Predicted requirements for mass market • Voice-enabled, location-based services will allow users to get context sensitive access to relevant, customized information, thereby enhancing significantly to them the benefit from the SHD. • Synchronization services will allow users to enter information just once in any device with assurance that the information will automatically be updated in all their connected devices, including cell phones, PCs, and their smart handheld. • Personalization services will give one-click access to a dynamic summary of the personal information that matters most - bank balances, travel reservations, investments, email, shopping, bills, calendars, and much more from their smart handheld device. Uncertainties Identifying the killer content application remains the single most important dimension that will decide the fate of SHDs in the future. Will consumers seek location-based information using the voice interface? Will they be willing to give up some of their privacy concerns and trust a third party vendor to offer them personalized content including their bank accounts? Will they seek out targeted application-specific solutions or generic one size fits all solutions? It remains to be seen. Winning Strategy for Palm – A Proposal Page 12 of 17
  15. 15. 3.2.5 Pricing and Revenue Models Currently subscribers of cellular phones are receiving equipment for free, but are committing to a certain service plan. Whereas, customers of SHDs are not only subscribing to a service plan, but are paying up front to obtain the device or equipment. Palm currently charges a $35 monthly subscription fee for services for its Palm VII brand. Above all, the current SHDs are relatively very expensive (Refer to Table 1) Early adopters are relatively price insensitive, but in order to accelerate adoption of these devices by the early majority, pricing is crucial. Predicted requirements for mass market In order to obtain customer lock-in in this emerging SHD market with several competitors, innovation in pricing will be key. Some of the revenue models in vogue are mentioned in Section 2.5. Uncertainty So far, in the cell phone market, revenues are generated by selling the handset and services together. Several different pricing structures have evolved due to the hypercompetition that has developed in this market space. Adoption of the SHDs by the mass market is difficult to predict because this new invention has to pass the economic test and not just technological test. Different pricing mechanisms have to be tested to reduce uncertainty. 3.2.6 Accessories/Companions Palm has always employed a strategy of add-on and plug-in expandability to deliver customized solutions tailored to the varied needs of users. Its support for Palm OS licensees and alliances with Kodak, Rand McNally, Omnisky and other providers have generated solutions for digital imaging, personal GPS navigation and wireless connectivity. To expand a Palm device's functionality, the Palm OS, until recently, supported four expansion protocols: Compact Flash, MultiMedia Card (MMC), Memory Stick (Sony Corp.) and Springboard (Handspring). Now, Secure Digital (SD) technology for the expansion slot has been added to this group to enhance data portability and complement wireless access. Winning Strategy for Palm – A Proposal Page 13 of 17
  16. 16. Predicted requirements for mass market • SD may enhance the use of Palm SHDs for sales force automation and customer relationship management applications. • Combining the use of a SD card with a snap-on peripheral presents even more multifaceted expansion options in the future. For example, a user might pop in an SD card of regional roadmaps and snap on a Global Positioning System (GPS) module, and the two would work interactively to pinpoint the user’s location, which would be displayed on the Palm handheld. • In addition to Secure Digital, Palm's expansion card slot will also accept miniature I/O devices, including those using the Bluetooth protocol - an open, short-range digital voice and data transmission protocol for mobile and desktop devices. Uncertainties This represents a classic chicken-and-egg situation in which Palm's connected handheld installed base will drive the adoption of more accessories, retrofits, and complementary, snap-on gadgets. Palm faces an uphill battle considering the competition it faces in Europe from local players such as Nokia, Ericsson and Psion. All these players share a common operating system named Symbian and have, arguably, created momentum amongst a common set of accessories vendors and complementary product manufacturers in Europe. In summary, the key drivers to the future success of Palm include:  the ability of Palm to reduce its prices and also come up innovative wireless pricing strategies  the number of services available from the device, such as a bank balances, travel reservations, etc.  how well Palm allows developers to easily build applications and include connectivity APIs.  leveraging the large developer base (100,000+) and creating developer base in Europe  integrate with future technologies into the device, such as the SD card and bluetooth  making devices increasingly easy to fit in your pocket but maintaining large screen sizes  designing devices which take advantage of the current wireless bandwidth available  ensure Palm devices can be easily synchronized with computers and other devices Winning Strategy for Palm – A Proposal Page 14 of 17
  17. 17. 4 Strategy for Palm 4.1Product roadmap We suggest a product roadmap for Palm in order to capture the mass market for SHDs in Europe. The following table shows product releases over the next three years with main features, target market, and rationale for suggestion Date Product Main Features Target Market Rational 1H Palm VII -Existing Palm VII -Consumers who need -GPRS adoption 2001 GSM/GPRS enabled for GSM real-time data access -Nokia/Ericsson building version network -Heavy PIM users not initial market share content with WAP -Need for quickly enabled phones introduce wireless- enabled version to grab mind share 1H M200 & -Secure Digital -Corporate users with -all PDAs incorporating 2001 Palm V+ expansion slot allowing heavy data usage SD & wireless. Palm backup and dtata - Students and other definitely needs to keep- intensive services entertainment target up with the market markets -need to create product extensions for m100 & Palm V 1H - USB port -snap on phone device -Handspring users -promote complementary 2001 - bluetooth – brings voice technology like - phone capability for m100, III, Handspring model snap-on V -Stealing the phone -2.5 and 3 G capability industry market share 2H SD add ons -I/O for SD card - consumers and -design I/O to be 2001 business verticals (ex: optomized for Palm OS. healthcare) 1H M300 & -bluetooth integration -upgrade from m200 -keep up with technology 2002 Palm V++ -ARM and Palm V+ trends & create HW to -2.5 G / 3G capable support computational intensive apps. 1H M400 & -Full multimedia -PDA / phone market -Initial W-CDMA 2003 Palm V+++ capability (streaming deployment video & audio) -Proliferation of -Voice recognition as multimedia content inputting providers over wireless Internet For the next one year, Palm needs to focus on introducing a wireless-enabled product as quickly as possible to grab the initial market. The development of the WAP market in Europe still remains a small but it has begun to ramp up with the introduction of Nokia 9210 Communicator and Ericsson Winning Strategy for Palm – A Proposal Page 15 of 17
  18. 18. R380. Palm needs to work with wireless service providers to figure out how content can be delivered over the existing Palm VII design with minimal modification. This effort must be supplemented by accelerating overall PDA diffusion (Palm m100, III, IIIx, V) to increase customer awareness and to encourage application developers community in Europe. Contingent upon this action, Palm needs to provide non-wireless users with a migration path to become wireless. This can be done by introducing a wireless add-on, possibly integrated with phone capability. 4.2Standards Palm should allow users to “look inside”, but not allow to update the Palm OS. This strategy will benefit Palm because it can still continue to license the OS and can also encourage the developer community to build applications that will increase adoption. The OS should have standard APIs that allow for easy development of applications. The adoption of a wireless standard is important. Considering the fact that GPRS is being touted as the emerging standard in Europe, Palm should adopt to GPRS instead of using some proprietary standard. Establishment of Secure Digital to allow other devices to plug-in is important. As devices for different functionality like MP3 players, digital cameras and smart cards converge, vendors can configure their devices to fit into Palm using Secure Digital. To succeed, Palm should encourage device makers to make Secure Digital compatible devices. In doing so, Palm competes with other standards like Handspring’s Springboard. To make Secure Digital, Palm needs to leverage its installed base. 4.3Growth strategies To grow its market share and to build a sustaining competitive advantage, Palm can use the following strategy: Winning Strategy for Palm – A Proposal Page 16 of 17
  19. 19. • Build on its initial strength – simplicity and elegance. Continue to apply its rigorous design philosophy and aesthetics as consumers demand more from their Palm. • Nokia and Ericsson are incorporating PDA capabilities into a cell phone based on Symbian’s EPOC OS. They have a first mover advantage in gaining initial consumer interest ahead of Palm. Therefore, instead of directly competing with Nokia/Ericsson, Palm should target slightly different market segments that put more value on dynamic data retrieval and manipulation than voice capability. • Integrate voice capability through plug-in/add-on solutions. Palm can position its device as a complementary to cell phones connected via Bluetooth or provide a snap-on phone peripheral. It would be difficult to create competency in voice communications internally as Palm started as a PDA supplier. Also, Nokia and Erricson’s core competencies are in voice and both have long history of operations and brand recognition. • Palm’s competitive advantage over Symbian OS is its large application developer community. It should replicate the creation of the community in Europe, especially wireless applications. To do so would require early integration of wireless APIs into its Palm OS.  Also, Palm should use the collective strength of Sony, Handspring, and other partners to promote the Palm OS. This includes leveraging the large developer base (100,000+) and making other strategic investments in emerging application vendors to enhance the Palm Economy, which further enhances network externalities. 5 Bibliography Books and Articles Derek J. Brown, (April 2000), “ The European Wireless Web”, Robertson Stephens Internet Research Geoffrey A. Moore, (1999), “Crossing The Chasm” , Revised Edition, Harper Perennial Jill House, (November 1999), “Smart Handheld Devices Bulleting: All in Sync”, IDC Market Analysis and Forecast Linda J. Mutschler, (March 2000), “The Next Generation IV: Wireless in the US”, Merrill Lynch Research Report Winning Strategy for Palm – A Proposal Page 17 of 17
  20. 20. Marianne Wolk, (June, 2000), “Wireless Data: The New Economics”, Robertson Stephens Technology Research Marc A. Cabi, (July 2000) “European Wireless Technology”, Credit Suiss First Boston Equity Research Report Nathan Rosenberg, “Uncertainty and Technological Change” Palm Inc., (August 2000) “Annual Report”, Palm Inc. 10K Palm Inc., (2000), “The 2nd Story: Building on Success-Palm’s Expansion Strategy”, Palm Inc. White Paper Vik Mehta, (July 2000), “Technology: Mobile Internet”, Goldman Sachs Global Equity Research Report Walter S. Mossberg, (November 2000), “Minimize Your Digital Clutter With Handspring VisorPhone”, The Wall Street Journal Walter S. Mossberg, (November 2000), “Sprint Attempts to Add Organizer to Cell Phone”, The Wall Street Journal “Unleashing the Internet”, Fortune Magazine Tech Guide Websites www.ericsson.com www.freedgar.com www.jxwireless.com www.nokia.com www.nttdocomo.com www.palm.com www.wsj.com www.jxwireless.com Winning Strategy for Palm – A Proposal Page 18 of 17

×