Steve: So, Ed, what do you think’s in store for us in 2003?
Ed: Well, it’s not easy predicting the future. Just taking the current trends and extrapolating them doesn’t always work well because it doesn’t take into account the occasional flashes of genius that profoundly change the way the whole system works.
Steve: For example…
Ed: Well, in the first half of the 20th century, science fiction authors saw computers getting larger and larger. In one story, Isaac Asimov had a computer the size of a planet! None of them predicted the flashes of genius that led first to the transistor and later to the integrated circuit, giving us computers smaller than a deck of cards with much more computing power than was used to send men to the Moon.
Steve: True, but that’s what keeps things interesting. It’s exciting to know that there are some incredible breakthroughs out there that will completely surprise us all.
Ed: It is exciting but it makes what we’re trying to do here darn difficult. Tomorrow, someone could have a flash of genius that will totally re-make the handheld market, and there is really no way to predict that. Still, we’ll try our best.
The PDA Market
Steve: One big question for 2003 is whether PDA sales will continue to shrink, or stagnate, as they have done for the past two years, or whether we’ll return to the double-digit growth of the late nineties. It’s easy to attribute the decline to the overall economic downturn, but I believe that there’s a more basic question that eventually needs to be answered. That is, is the PDA an enduring computing form factor? Personal computers, laptop computers, Tablet PCs, smartphones, PDAs. Is there room enough for all of these or will some fizzle away?
Ed: I see PDAs and smartphones merging over the next couple of years. It won’t be long before a handheld that isn’t connected to the Internet will be as pointless as a desktop or laptop that isn’t. This isn’t going to happen in 2003 but we’ve already seen this trend beginning and it will grow stronger this year. As people trade in their old handhelds for new smartphones, I see smartphone sales increasing a bit as compared with last year.
Steve: I’m still bearish. My prediction for 2003 is that the economy will continue to struggle and PDA sales will continue to be flat, despite lower prices. In other words, more of the same. As far as whether the PDA is here to stay or whether smartphones and connected organizers will take over, only time will tell.
Ed: Let’s talk about the players in the PDA market, starting with the Palm Platform companies like Palm and Handspring.
Steve: Palm and Handspring are what I call single-focus companies, companies that have all of their eggs in one basket, so to speak. When they pick the right product, like handhelds, and the market is growing, everything’s fine. But when times get tough and money runs short, sometimes the only option is to sell out to a larger, more diversified consumer products company.
Ed: So you’re saying that Palm and Handspring will be absorbed by a couple of bigger players?
Steve: Not exactly. I believe that Palm will pull through once again in 2003, mainly by continuing to control costs and by introducing a few new well-positioned products, mostly mid-priced handhelds. While the top line may not grow significantly, the bottom line will be enough to keep the dream alive.
Ed: What about Handspring?
Steve: Handspring’s another story. I just don’t think smartphones will take off quickly enough to keep them afloat. So my bold prediction here is that Handspring will be acquired in 2003. What do you think, Ed?
Ed: I’m willing to go out on a limb and predict that Handspring will be acquired by Palm itself. Palm’s been fooling around with wireless handhelds for years without creating anything all that compelling. And here’s Handspring with its Treo line, the best smartphones I know of. Together, I think they’d make a great team.
Steve: Will Jeff and Donna return?
Ed: Yes. Jeff Hawkins has already figured out that smartphones are the way to go and so he’s just the man to provide Palm with some vision. And Donna Dubinsky is a brilliant manager, and let’s face it, most of Palm’s problems over the past couple of years have been caused by bonehead management decisions.
Steve: What about Sony? Has it completed its “WalkMan-ization” of the PDA market?
Steve: What I mean is, Sony is doing the exact same thing with its Clie handhelds that it did with the WalkMan. It’s releasing a lot of different models at a lot of different price points. It’s like throwing a handful of spaghetti at the wall and seeing what sticks. And I expect that it’ll continue to do that through 2003. Maybe even experimenting with colors and form factors.
Ed: Ahh, I get it. Yes, that’s exactly what’s happening. For a long time, the handheld market was a bit sedate. Companies came out with new products maybe once or twice a year at most. Then Sony came along and did the equivalent of tossing a live squirrel in a room with 10,000 golden retrievers. It introduced radically new models every couple of months, designed to appeal to different groups. The handheld market will never be the same.
On the other hand, I worry if its investment is paying off. Sony has to be spending tons on R&D to create handhelds that are only on the market for a few months. I don’t want some Sony bigwig to decide too much money is going out and not enough coming in and dropping the handheld line.
Steve: So what’s your forecast for the Pocket PC market?
Ed: There’s an important factor in the success of a handheld that I think too many Pocket PC companies have ignored and are continuing to ignore. That factor is the appearance of the handheld itself. Many people are predicting that Dell will quickly become the largest Pocket PC maker and soon come to rival Palm in sales because its handhelds offer good performance and features at a low, low price. That’s the way Dell came to be at the top of the heap in desktop computer sales.
Steve: With all due respect to J. Lo, I feel a big “but” coming on.
Ed: Ha ha. But what the people who are predicting the inevitable rise of Dell are missing is that handhelds aren’t desktops. No one really cares what their desktop looks like or how big it is because it sits under their desk or even hidden away in a cabinet.
Steve: Except for those iMac owners.
Ed: True. But a handheld is something you look at all the time and your friends and co-workers see you using. People will pay a premium for good looks. Don’t forget the Palm V. The Axim X5 just isn’t a very attractive handheld. Unless Dell starts putting more effort into design, it will stay solidly in the middle of the pack, behind HP who has just recently figured this out.
Steve: I agree, and unless Toshiba gets on the industrial-design bandwagon, you can toss them in the “middle of the pack” as well.
Ed: Where do you think the technology is going?
Steve: Well, it doesn’t take a prophet to predict steady improvements in things like processors, memory, screens and batteries. So I’ll just comment on the technology that seems to have everyone’s attention lately, wireless. It’s a ball of confusion out there. There’s Bluetooth for connecting your personal devices to one another, 802.11b for connecting to the ever-growing network of wireless LANs, and GPRS for connecting to the bigger, wider world of wireless. Yet they all have issues. Bluetooth is the temperamental, wild child of wireless, still needing a year or two to shake out. Wi-Fi, or 802.11b, feeds on power, more than most PDAs have to offer. And GPRS is not always there when you need it.
Ed: So what does this mean for this year?
Steve: My prediction is that, while we’ll see a steady increase in wireless adoption, we’re still at a painful stage in its history. No, there’ll be no wireless miracles in 2003.
Ed: I agree. As I said before, I believe that in the future almost all handhelds will be wireless. Will it happen in 2003? No. But I think we will see this year the first handheld that has built-in GPRS, or CDMA, and Wi-Fi. This will allow it to be connected to a Wi-Fi network in a home or office, then automatically switch over to GPRS or CDMA when it moves out of range of the Wi-Fi access point. We’ll also see an increasing percentage of handhelds with some type of wireless networking built in.
Steve: Is the wireless infrastructure ready for that?
Ed: Of course, this will require improvements in wireless technologies of all kinds. CDMA2000 and GPRS are good starts but we need even faster speeds and lower costs. I believe wireless networking won’t become ubiquitous until everyone can get an unlimited bandwidth account for less than $25 a month.
Steve: So, what are your thoughts on the future of the Palm Platform, specifically Palm OS 6?
Ed: Palm OS 6 will be released this year, which will complete the platform’s transition to ARM-based processors. It will include the ability to run ARM-native applications and do multitasking. It will also remove the irritating 4K limit in the built-in apps. OS 6 will also do away with the infuriating 16MB limit in the amount of RAM the operating system can address.
Steve: That’s your prediction?
Ed: Well, it doesn’t really qualify as a prediction; PalmSource has already said its new OS will have these features. But here’s where I leave the beaten path. The user interface will be almost exactly the same as the current one. Many users expect a radically new one and I ask, what for? The current one isn’t perfect but it’s very good and millions of people are familiar with it. Using a new one would be change for change’s sake, or, as my Dad likes to say, “If it ain’t broke, don’t fix it.”
Ed: So what’s your big prediction for Pocket PC?
Steve: Now it’s my turn to go out on a limb. My prediction? Start planning Windows CE’s funeral. Long live Windows XP. What do I mean, and how does it affect Pocket PC? Well, imagine you’re the head of Microsoft’s mobile computing group. You’ve got laptops, Tablet PCs, Pocket PCs, Smartphones, and various other embedded devices. You’ve got multiple platforms relying on multiple OSes. Eventually you’ve got to question whether this makes a lot of sense and whether you can support the whole kit-and-kaboodle…
Steve: Technical term. Eventually you wonder whether there’s a way that you can support all these platforms with a single, modular code base. Enter Windows XP and Embedded XP. So my prediction is that eventually we’ll see Pocket PC based on some form of XP, not Windows CE. I’m not sure if this will happen with Pocket PC 2004, or if PPC2004 will be based on Windows CE.net, but it’s coming.
Ed: Well, Microsoft has a habit of doing radical re-writes of its operating systems so this wouldn’t surprise me. I just hope they don’t forget the incremental changes people have been asking for, like increased use of landscape mode and higher resolution screens.
Steve: And alarms that work.
Ed: With new versions of both major operating systems coming out and lots of new licensees to shake things up, this year will be an exciting one for the whole handheld world. I’m also going to keep an eye on some dark horse technologies that might come out of left field to radically change things…
Steve: What’s a horse doing on a baseball field?
Ed: Don’t bother me with mixed metaphors, I’m on a roll. Anyway, I’m talking about virtual keyboards, flexible screens, fuel cells, and other innovations that might be important, and might not.
Steve: Could be interesting.