PDA RIP?
by Paul McGoldrick
As one of the very early adopters of a hand-held address book/calendar device
-- which I still see as the major advantages of the organizers that came
to be called PDAs -- I was probably also one of the first to pitch the thing
into the garbage. Why? After two weeks on vacation I came back to a device
that had a dead battery and a dead memory. Reconstruction of just my address
book was a painful task that I promised myself I would never repeat.
Of course the things are much better now and the availability of syncing with your PC, so you would at least have a back-up copy of everything, rather changed the picture. But it never persuaded me to change my mind about the devices.
And it seems in general that the attitude of most people is black-and-white about PDAs. You either love them or hate them; the latest VW Beetle equivalence? And it is estimated that only one in ten owners of a PC actually owns a PDA.
Most of the component content in a PDA is analog. Yes, there is a smart core but all the display, control and power functionality is analog and thousands of ICs have been designed for the devices. Over the last two years the honest analog vendor would throw up his arms in exasperation when asked about how the PDA market was doing. It has been an awful period for the devices.
And this is not a matter of brand name. Overall the manufacturers of the handhelds have suffered badly, and while the HP/Dell products are being pushed hard (using the Microsoft OS) sales are at commodity pricing in the bargain stores. While it holds the third worldwide position in sales of PDAs, Sony has decided to pull out of the US market and not to offer its latest Clie here. That offers an interesting conundrum to Palm.
A while back, amid the merger with Mindspring, Palm split into two companies, PalmSource and palmOne, representing the software and hardware products, respectively. One suspects that recognizing the less than rosy sales of Palm devices the board decided it didn't want the OS tarnished by hardware sales, or lack of them. The number one revenue stream today for PalmSource is still from palmOne, but Sony is a close second, apparently representing what has been estimated as about 27% of revenues. How much of that is tied to PDAs rather than other products we, outside the company, are unlikely to ever know.
The other licensees of Palm OS include Samsung, Kyocera, Garmin, Lenovo, PerComm, Symbol Technologies, Tapwave, Fossil and others, so the remainder of the OS revenue stream is pretty well spread but the reduction in revenue from Sony could be a serious matter. The financial markets reacted by seeing the revenue reduction as a negative for PalmSource stock, but a positive for palmOne -- presumably in the expectation that palmOne devices could take a larger slice of the market. But what does PalmSource really think about that?
Sometimes in business old friends can become near enemies, and when you are pitching your own enterprise the truth can sometimes be difficult to hide, even when you want to do no harm to others. Such seems to be the case in recent presentations to the financial community by PalmSource. As an example, listen to the presentation given by the PalmSource CEO, Dave Nagel, at the Lehman Brothers Global Wireless Conference on May 24, 2004 and you will hear tell of where PalmSource's future is. The message is very clear; that the company wants to be the primary OS source for smartphones, not an OS known for handhelds.
510 million handsets were sold (or given away, or heavily discounted…) in the last twelve months Mr Nagel tells us, and the company sees an increasing move to making those phones smarter. PalmSource is signing up developers at an incredible lick (an average of 2000 per week) and most are seeking ways to increase the smartphone's ability to run particular applications. Nagel even claims that the latest Palm OS is better linked to Microsoft Office applications than the Microsoft OS is…
So, PalmSource is desperately seeking to distance itself from PDAs without actually hitting out at its corporate sibling. But what is palmOne doing to save its future? Well, strangely enough, the President/CEO of palmOne (which is still losing money but claims that the Mindspring merger is complete) is very clear that although he wants to keep an introductory handheld product for newbies he also sees their future in the hardware of smartphones (J P Morgan Conference May 5, 2004). Gosh, it's almost as if the two companies never separated at all… But the Palm name has become synonymous with handheld products, and if they truly believe that wireless products are going to be their future they should seriously consider a corporate name change to reflect that, and then keep the Palm name attached to any remaining handheld products.
Whatever. I wish both companies well, I really do. Sales of products
like smartphones will be a continuing reward for the analog semiconductor
industry and that's what we're about here at analogZONE.
But, as for me, you're not going to see me any time soon -- if ever -- with
a smartphone in my hand: I won't be doing "applications" in the
air, or at the Starbucks at the C gates.