Brighthand Reports from the PalmSource Developer Seminar

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David Nagel According to David Nagel, CEO of PalmSource, the handheld market is “alive and kicking.” And soon it will rumbling as well, thanks to a Palm Powered handheld gaming device that vibrates, expected to be available later this year.

In his opening keynote at the PalmSource Developers Seminar in San Mateo, CA today, Mr. Nagel explained that while handheld sales had slipped during the past eighteen months, the total number of handheld users — now totaling more than 20 million — continues to climb, with most purchasers being first time buyers. While this is certainly good news, the best is yet to come, according to Mr. Nagel.

Wireless, specifically the “anywhere, everywhere” variety we’ve been hearing about for the past few years, will change everything. While this comes as no surprise, it appears that it may take longer than originally expected. PalmSource believes it should all explode around 2007, when prices of wireless phone chipsets are expected to drop below $10. By then, sales of traditional PDAs will have peaked, while new convergent devices (including something PalmSource refers to as a “mini-tablet”) will begin to dominate the landscape. Mr. Nagel said that it’s likely we’ll mourn the death of the traditional PDA somewhere around 2012.

Which leads us to — drumroll, please — Palm OS 6.

It seems only natural that wireless is what Palm OS 6 is all about. (Well, that and the ability for developers to create native ARM applications rather than always adhere to the constraints of the Palm Application Compatibility Environment, or PACE, introduced with Palm OS 5.) In fact, Mr. Nagel reiterated PalmSource’s commitment to support all major wireless standards, from Bluetooth to Wi-Fi to GSM and GPRS to CDMA. In addition, Palm OS 6 will be “the most secure operating system in the world,” according to Mr. Nagel. “We’ve gone to extraordinary lengths to make Palm OS 6 a secure environment.” Finally, look for some cool new multimedia technologies in Palm OS 6, thanks to the folks that came over in the BE acquisition.

But don’t expect to see Palm OS 6-laden devices on store shelves soon. According to PalmSource, the final cut of Palm OS 6 will be in licensee’s hands before the end of the year, with devices popping up sometime in early 2004.

Beyond wireless, Mr. Nagel had some positive things to say about corporate IT spending, something we haven’t heard in quite a while. He cited a recent PalmSource study that indicated that 90% of IT managers surveyed said they would be spending more this year than last. And he went on to challenge the conventional thinking that corporate IT folks tended to adopt Pocket PC technology over Palm technology, given Pocket PC’s association with Windows and Microsoft. According to Mr. Nagel, Palm OS continues to grab 55% of direct corporate sales, compared to 24% for Pocket PC. He cited ease of administration and lower total cost of ownership (TCO) as the two main reasons for the Palm Platform’s success in the corporate world.

But the real buzz around the seminar wasn’t about corporate IT spending, or Palm OS 6, or even wireless. Rather, it swirled around Tapwave and its recently announced foray into handheld gaming. While I confess I’m not much of a gamer, its new device, code-named Helix, may just convert me.

Tapwave

Byron Connell Tapwave’s co-founder Byron Connell explained his company’s view of what it calls “the Mobile Gaming gap.” According to Mr. Connell, the average X-Box and PlayStation 2 user falls in the 18 to 34-years-old range, which GameBoy does not address. This is where Tapwave comes in. It estimates that the potential market for these “gappers” will be between 25 and 50 million devices by 2004. By comparison, 24.6 million GameBoys were sold in 2000 while an estimated 50 million are expected to be sold in 2004.

Among the interesting topics Mr. Connell raised in his brief presentation was the need for “cross-platform persistent characters,” so that the characters you see on the desktop version of The Sims, for example, can be dragged and dropped to your handheld. Also, he emphasized the overwhelming support for Bluetooth by Tapwave’s partners, and the impact it will have on multi-player wireless gaming.

The most compelling story behind Tapwave is its “razor-and-razorblades” revenue model. Handheld makers have struggled to develop a way to generate recurring forms of revenue from its customers. Tapwave believe software (i.e. games and multimedia content) is its answer, its razorblades. Therefore, it can aggressively price its devices. Still, it’s all in the execution, and Tapwave remains an unproven entity.

Palm Solutions Group

Todd Bradley, President and CEO of Palm Solutions Group, provided an interesting overview of its product line segmentation, which centers around the Zire and Tungsten sub-brands. Although the Zire products are said to meet “personal” needs while the Tungsten products meet “professional” needs, there remains a healthy overlap.

Mr. Bradley did reveal that the C in Tungsten C actually stands for something. No, not cool. Campus warrior. (And maybe T signifies Traveler.) But no one seems to know what the 71 in Zire 71 represents.

Aceeca

Aceeca Alex Topschij, CEO of New Zealand-based Aceeca Limited, explained the purpose behind his company’s move into what he calls “a new breed of Palm Powered devices.” These Industrial Digital Assistants, or IDAs, look to be a modular, and lower cost, answer for industrial grade sensor and measurement devices that currently sport proprietary firmware.

This is exactly what Microsoft hoped to accomplish with Windows CE but has had limited success. Mr. Topschij said the decision to go with the Palm OS was “not a difficult one” and that Windows CE was never considered.

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