Palm should sell to a bigger company, says former manager

Everyone above wrote their blogs from a Palm Treo!

What about the carrier role in marketing? In the US certainly the carriers play a strong role in marketing and subsidizing the price of these products. Outside the US the model is generally more retail driven, but not always.

Carriers generally care about keeping customers and acquiring new customers to their network. By offering brands that consumers know and want – even the newest devices – they will achieve this goal. That's why you see so many articles about the concerns at Verizon and Sprint when the iPhone launches exclusively on Cingular in the United States. How many users will switch to Cingular just to get the iPhone?

Finally, anyone getting into this business would likely work with a 3rd party ODM at first. Someone like HTC. This company already has relationships with the US carriers and can help with this part of the equation as well.

I'm not saying that it's easy to manage the carrier relationship. However there are enough incentives on both sides of the equation to make it work.

Palm never wanted to make cell-phones, they make smartphones, and they do that the best from user experiences. Upcoming iPhones from Apple may have dazzling screen display, but without a hard qwerty-keyboard it won't be more useful than say just a better designed music/video phones. Virtual onscreen keyboards, and that too without any stylus, aren't useful at all, say when one need to type a short e-mail, or a bit long sms, let alone doing say a spreadsheet correction. So there… ! Another thing about those so-called sleek paper-thin wannabe phones : just stay as cell phones and don't become SMART. To incorporate a qwerty-keyboard on those thin plates(plastic ?), specially a sliding one, would be so ludicruous, one would be afraid to type on in fear of not getting a solid feedback response that one usually gets from typing say on Palm Treos. So as long as Palm continues to make Treo like sleek but solid feel-good user-useful smartphones they will continue to stick around in the business.

Hi Jon,

This is Gibu and I wanted to clarify a couple of things. I didn't write the original article because I am bitter (I have no reason to be) or as an indictment of the Palm management team (whom I respect tremendously and consider to be my mentors).

My goal was to write an objective piece about the structural dynamics that make it hard for smaller, niche players to compete in a world where their channel is owned and controlled by someone else, the carriers in this case. The point of the article is to highlight the conundrum that even great management, which Palm has, can't do much in that situation.

Clearly, the article was not read this way. It also didn't help that VentureBeat (accidentally) replaced the bio I wrote at the end of the article, where I say the following:

"Earlier in his career, Gibu helped incubate Palm’s wireless carrier business and had the good fortune of watching the founders of Palm at work and learning how great companies and product experiences are built. "

My point is this: Palm is a great company founded by visionaries who went against conventional wisdom and built an amazing user experience. Every startup, including Sharpcast, can learn from their successes, challenges and mistakes.

Cheers,

Gibu Thomas,
CEO, Sharpcast

Good points, John. One thing you don't address, though, is the role of carriers. They're still the biggest barrier to entry, even more than phone-making know-how. New phone makers can't just build a phone for the masses and put it on every carrier's network (at least in the U.S.); they have to work with the carriers on marketing, pricing and distribution.

With the iPhone, Apple's trying to tilt the balance of power away from the carriers for perhaps the first time — unlike most other companies, Apple has the cool factor, marketing machine and distribution network to successfully launch a phone largely on its own terms.

We'll see if the iPhone opens the door for others to do the same.

Everyone is asking the wrong question. The street and every blog I see. Their question is "How does Palm and the Treo(TM) compete with Motorola, Nokia, and other large manufacturers of cell phones?" The real question is "How does Motorola, Nokia, and these other large manufactures compete against Palm or more specifically any consumer electronics/ or computer company in the world?" Why?

Nokia, Motorola, Siemens, SonyEricson, etc.. are the world market leaders in the cell phone business. A business that ships over a billion units every year. A business where the market potential will be nearly every adult and teenager on the planet.

20 years ago, 15 years ago, these companies had unique intellectual property, engineering expertise, and manufacturing capabilities that allowed them to build cell phones. However, fast forward to today and that IP, and knowledge is rapidly being dispersed across a larger number of computer and consumer electronics companies. Case in point – RIM, Palm, Apple, HTC, and very soon, many, many more companies. And why not.

If you are the head of a consumer electronics company today you can easily see that cell phones represent the largest market potential out there. So why not grab a portion for yourself. Let's say you are a stereo manufacturer like Bose – why not go after that business? If you steal one percent market share you might double revenue. And there's plenty of ODM's that will help you do it.

So in this new world of many, many more companies soon to be developing and building cell phones – the market leaders, share of market, can only go one direction…. down. In this model all these new competitors are like nats, each pulling just a little market share every quarter.

Remember the street doesn't like to invest in companies with declining market share. As the leader it's also harder to innovate because you spend your resources defending the core.

RIM, Palm, Apple… just the first of many.

So what happens to Palm, or RIM, or Apple? If they continue to innovate they'll continue to grow their business, and grow it profitably.

Will Nokia or Motorola acquire any of these players. Maybe. Maybe not. In the long run it won't matter because it's hard to not loose market share under these conditions.

Forget the Palm pumping, Christina. The writer may be biased but his points stand. Palm isn't dead yet, but they've dug their own grave. Nokia and Motorola will pile the final heaps of dirt on it. 3 years, tops.

wow, didn't this guy used to work at palm? maybe someone is a little bitter? i'm not sure anyone thought palm would be the next apple (18,000 employees) but i can understand that if you did you would feel a little burned. Palm (1,100 employees) seems to be doing great with products launching worldwide and milking the handheld market for r&d money. i'm glad they aren't one of the "big dogs" because i can still feel a peice of the company everytime i buy one of their products. i don't think they need to do a whole lot new because everything new that is coming out is stuff that palm already did. things are new and inspiring for other companies becuase they've never done it, but palm can sit back on the laurels for a while as people are still figuring out what you can do with these devices. Accelerometers? the lifedrive had those. Word, Powerpoint, Excel – creating, editing and sending capabilities, had it for years. touch screen? been there done that. more than 20k software apps to choose from per device? yeah they got it. it will be great when people in silicon valley realize that they aren't the center of the universe nor the norm when it comes to consumer expectations. just because a technology exists doesn't mean people want it or will know how to use it or will be willing to pay for it.

this is not analysis…. this is a terribly written article based on speculation. Are you another of those wonderfully astute "sources"?