Sony has informed us that they will not release any new Clie PDAs this year in the US. The Clie line will continue in Japan though. This move is of course devastating for a number of reasons. We have all the details along with five different takes on what this move means to the PDA world.
We had a conference call with Sony last week to discuss what we thought was going to be about the new Clie releases, hopefully something with OS 6. Much to our chagrin, Sony started by reading a very brief statement that clearly indicated their intent to vacate the PDA space in the US for at least the remainder of this year. Sony wanted to be very clear on a few points though:
- This move is a re-grouping, not an exit from the market
- Sony will continue to sell through stock of current models which could last for several months
- Sony will continue to honor all support agreements and warranties
- The Clie line will continue to grow and evolve in Japan
- They believe wireless is very important to mobile devices. To this end they will continue to work hard in the SonyEricsson partnership to bring innovative devices to market
- Beyond wireless Sony feels mobile devices need to be strong in multimedia and gaming
So after having a while to digest this call and information, I m left thinking about what s next for Sony. At one point not too long ago, Sony had palmOne (then Palm) on the ropes. Sony was innovating, not just with hardware, but with the operating system and bundled software as well. Then a number of things happened. Palm released the Tungsten T. Sony s strategy became fragmented, pursuing many different model lines, turning each over very rapidly. Sony would make incomprehensible design flaws, like providing a CF slot that only worked with their WiFi card. In short, Palm got their act together, while Sony continued to use a rapid-fire shotgun approach that probably had them going in too many directions.
But the issues here are much more severe than Sony deciding to step away for a breather. palmOne is now stuck in a very precarious position. They re now much like the Apple of the computing world – the only major licensee of the Palm OS. Sure there are dozens of other licensees, but combined, they don t have the visibility or sales of Sony. The exit by Sony will certainly mean a shift in the balance of power to Microsoft. The race between Palm OS and Windows Mobile was so close already, there s no other reasonable outcome. Surely palmOne will scoop up plenty of prospective Sony buyers, but it s impossible to capture all of them. With Dell releasing the new X30 s at such an amazing price and HP coming out with 7 new PDAs in the next several weeks, Microsoft has to be feeling very good about their place in this market. This shift could end up hurting palmOne badly, if their next round of releases doesn t keep pace with their past few.
The other big question is how will Sony return to the market. It s pretty much a given that they ll not totally neglect the PDA market in the US, but what they come back with is anyone s guess at the moment. They made it clear that gaming and multimedia was important to them in a handheld device. So it could be that Sony will push their Mobile Gaming device while developing the Sony Ericsson line more fully with wireless PDAs. It s also possible they ll let the Japanese market dictate what happens next over here. The Clie line could also go away entirely, being merged into their Vaio notebook line. It s no secret that ultra portable notebooks are cutting into some of the PDA market share, so it s possible Sony will make a tiny Vaio, or large UX50 to fill the need.
Just know that nothing s out of the question. Sony did not rule out using Windows Mobile in a future device, but they did say they like the flexibility the Palm OS provides. The closing down of the Clie line for the rest of the year is certainly a downer for the PDA market, but rest assured that Sony will be back, surely with a vengeance, next year. Maybe the devices will release under the name Phoenix?
Other Takes from bargainPDA.com news editors
With the current state of handhelds, palmOne is in a position to be a little bit more than the Apple of the PDA space. PalmOne has shown the ability through the Tungsten T3 and Zire71 of being able to pull out a knockout device when its needs to. This announcement by Sony only means that they have to pull that rabbit out more than just twice a year. There needs to be a faster turnover, no matter the financial burden, to churn out better models. It also means that they will have to have Apple levels of quality control. PalmSource has basically taken the OS and done what they can, PalmOne now needs to grow on that and create a true mobile platform.
The Treo line needs at least two more models. A Treo 200 like model that is color and just a phone with no expansion would work great. It would also be under $200 BEFORE the contract so that it can sell well. the Treo 600 needs to drop in price so that a better model can replace it. BT and hi-res on a $600 device is not much to ask, it may not sell well, but it will bring the people in. In the Zire line, there needs to be something in between the Zire31 and Zire72. Create a Zire51 and make it to be a replacement to the TE and you have a great sell at $225. The Tungsten line should all be outfitted with Bluetooth, WiFi and minimum 32MB of RAM. If these are business devices, build them to play hard.
Create a better TC with dual wireless and a T3 with better battery life, or at least removable batteries. These are the elements that PalmOne will have to come out with if they expect to hold off MS for half a year. The other thing that needs to happen is another major player needs to be a Palm OS licensee. PalmSource will not survive. Even if Apple was to take up and (finally) make a PDA, then that would help PalmSource stay. If not, and Sony does not come back with sure plans, then we can expect PalmSource to be bought out shortly after the Christmas season by HP or Dell. PalmOne may also be shut out by that time as well. Granted, I am only speaking in theory, but Sony leaving is a heck of a first domino.
The whole CLIE line is a money loser for Sony. With the weak dollar this year it is I’m sure magnified, as the Yen gets stronger and the dollar weaker the slim profit margins they may have made on the U.S. sold devices turn to losses. Therefore I believe this is a combination of pure business dollars strategy and also a chance to step back and make sure that their product lines aren’t competing too much with one another as a new Playstation handheld is released, the VAIO line becomes more mobility and entertainment focused and the Sony Ericsson line becomes more PDA like with new SmartPhone releases.
Hindsight, of course, is 20/20. Sony’s sales for the first quarter were dismal, and overall sales have been stagnating for awhile. Given the increasing pressure from Pocket PCs, and a growing dissatisfaction with their recent units among some of the user base, it’s no surprise that the handheld market is looking less and less attractive to them.
As for the impact on the Palm OS, I don’t know about a death blow, at least not yet, but it could end up hurting palmOne, being the only major licensee in the US. PalmOne becomes the lone company pitching something that is perceived as incompatible or out of touch. It stops being a battle, and becomes just swimming against the current. Even though they’re the largest manufacturer now, palmOne could easily see their market share taken away by the Pocket PC manufacturers like a wolf pack taking down a bear.
Also, with Sony out of the picture, the Palm OS runs into a design problem.
You’re left with one company, building units according to the PalmOne design ethic. T3s and Z72s rather than TH55s and TJ37s. It’s not that Sony’s designs were particularly brilliant–sometimes they could be simply bad–but it’s a matter of diversity. Two companies meant twice as many units, different designs, different priorities. If you didn’t like palmOne’s units, try Sony. If Sony is out of the picture, you’re throwing palmOne’s single flagship model against those from HP, Dell, Toshiba, and Asus. And if users don’t like palmOne’s models, they have nowhere to go but Pocket PC, further marginalizing the Palm OS.
PalmSource is certainly going to be in trouble, and some people are going to be righteously cursing the spin-off. It should be interesting to see how this news impacts their stock price today. Which brings up the question: if PalmSource can’t get another significant licensee quickly, how long before the company gets rolled back into palmOne? As I see it, those are really the only two options: get another big name, or reintegrate the company. Of course, there’s the third option, which is to keep chugging along on the status quo for awhile, but it still ends up returning to the first two. Perhaps SonyEricsson will go main stream with their smartphones as part of this move, filling the void left by Sony.
On the prospect of Windows Mobile, I just can’t see Sony making a Pocket PC. They’ve always made a point of tweaking and twisting both the OS and the hardware design, and that doesn’t seem as easy on the Pocket PC side due to the hardware commoditization and more rigid design requirements. What I could very easily see them do is license not the complete Windows Mobile, but the Windows CE core. That would give them a lot more flexibility in what they wanted to build, right up to and including a micro-Vaio in the style of the Netbook or the UX50. It is true that Microsoft has relaxed its hardware restrictions a couple of times, but I really don’t know by how much, or what they are at the moment. WM2003 Second Edition does, however, remove one significant roadblock to a UX50 style Pocket PC, vis a vis landscape support.
At first, I had only negative thoughts on this issue – sure sounds bad for Palm OS in general. But then I started to wonder – why would Sony announce that they are getting out of the game for a while? Why not just keep quiet and simply not introduce new models to the US? To me, it is simply a bad PR decision on their side, or they have something special planned that they are not telling us.
Having said that, on the business users side of the house, I think the PDA as we currently know it is nearing the end of the line. Even the new Treos and Blackberrys are fine, but not enough. We really need a mobile office device that is capable of secure communications with the home office. Phone plus desktop capability plus GPS. I currently carry two PDAs (one with GPS, the other hot syncs with my office desktop), a phone, plus a laptop (for heavy when I leave the office). And I am not the only one who is complaining about this. Perhaps Sony is heading in this direction, though I fear they will focus more on the gaming/media side than the business side. There is a lot of money to be made in the gaming/media world, but it is the business side of the house that runs things in the end, ala Microsoft (business) vs. Apple (graphic arts).
After trying the TJ37, I was surprised at the lacking screen quality. The unit was really of no pleasure to use, especially to browse the web. The best PDA Sony has released in the US market over the last year is arguably the UX50, which is significantly overpriced. In seeing the pattern in both mobile phones and handhelds, it is my feeling that Sony offers much better versions of their products in overseas markets, denying US consumers the quality and features it offers with similar products released in Europe and Japan (like the TH55 with WiFi and Bluetooth). It will be interesting to see how the Clie line evolves in Japan; that will surely be a harbinger of things to come for the US. While it s sad to see Sony leave the market, I m not sure I m going to miss them much. I m more looking forward to what comes next, because you know Sony s not just going to sit out for too long.