Will palmOne Become Another Apple?

by Reads (54,251)

At times, the comparisons between palmOne and Apple are almost startling.

Both started out dominating their respective markets, only to see this slip away… in both cases to Microsoft.

So the question is, will palmOne end up like Apple?

Separated at Birth

I remember the mid-80s, in the early days of the Macintosh. I can’t confirm this, but I remember reading that at one point Apple was selling computers so fast that none of its departments needed a budget. Money was coming in faster than anyone could possibly spend it.

Later, when the first version of Windows came out, we laughed at its incredibly clumsy attempt to copy the elegant Macintosh interface.

But Bill Gates and his team kept plugging away, and each version of Windows got better and better. At the same time Windows PCs were less expensive than Macs.

Steve Jobs wasn’t worried. He believed people would pay the extra money to get what they think is the best.

Turns out he was right… sort of. Only a small percentage of people will pay a premium for quality.

That’s why Windows dominates the desktop world, while less than 5 percent of computers sold are Macintoshes.

Now let’s look at Palm Inc. in the late 90s, when it utterly dominated the handheld market.

When Microsoft released Windows CE, we laughed at its clumsy attempt to copy the elegant Palm OS interface.

But, again, Microsoft kept releasing new versions, each better than the last.

Now we’ve reached the point where, for the first time, more Windows Mobile devices are being sold than Palm OS ones.

So I’m wondering, is the parallel between Apple and palmOne going to continue?

Similar but Not Exact

Before I go any farther, I’ll point out that the two situations aren’t exactly the same.

Apple tried licensing its operating system for a few years, but gave it up after a while. And it never seriously considered splitting into an operating system company and a hardware company.

Palm Inc. did license the Palm OS to lots of companies, and, of course, it split into PalmSource and palmOne a couple of years ago.

Any comparison between the two companies has to take these into account.

A Possible Future

Even though the situations aren’t exactly the same, I think they are close enough that we can use Apple to see a possible future for palmOne.

I can see a time when palmOne will sell its products to a very loyal — but very small — group of customers.

I’m talking about less than 5 percent of the world handheld/smartphone market, with most customers concentrated in the U.S.

While not exactly a rosy future, especially from palmOne’s perspective, it isn’t a disaster, either.

Again, I turn to Apple for examples. Even though it has a very small percentage of the computer market, if you want a Macintosh you can easily get one. You’ll have to pay a bit more for it than you would for a similar Windows computer, but Apple has maintained its reputation for making cutting-edge, elegant products.

And Apple continues to be profitable. Not anywhere close to how profitable Microsoft is, but the company’s in no danger of bankruptcy.

palmOne might easily settle into the same situation. It could continue to be profitable by selling well-designed handhelds and smartphones to a relatively small group of loyal customers. These are the people who’ve been using Palm OS devices for many years and will pay a premium for them because they will never willingly switch to Windows Mobile.

But Not the Only Possibility

However, I want to make clear that this isn’t the only possible future for the company.

Mobile email is going to become a standard part of the business world in the next few years, and sales of cellular-wireless handhelds are going to rise dramatically.

The Treo line is a very good mobile email device, and sales of this smartphone could propel palmOne back to its former dominance.

Of course, to do this it will have to convince millions of people that the Treo is a better option than RIM’s BlackBerry or the new crop of Windows Mobile devices that will emphasize mobile email.

Only time will tell.

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