Palm Responds to the iPhone

Several people noted a NYT piece about Palm's response to the iPhone. Essentially, their response appears to be to hire a former Apple engineer and a couple other folks -- while also pursuing plans to perhaps sell the company. Nothing like a dual approach to the problem.

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How wise is industry wisdom?

[hey!]

From TFA:

The company's own Palm OS software is widely seen within the industry as aging and in need of a fundamental revision.

I went into a big box computer store recently, to buy a cable for a PDA I'm developing for. I was shocked; a few months earlier thre had been about twenty feet of counter space devoted to PDAs. Now there was zero -- just two shelves under the counter, maybe two feet wide, half for Palm, half for HP iPaqs. In its place was now twice the retailspace, devoted to iPod accessories.

While the industry had been busy competing to offer "updated" PDAs, Apple has kicked the entire lot into retail obscurity. They can't even, as entire industry, hold their own against fashion cases for the iPod Nano. Apple is a company that has carved out a niche by not only ignoring, but flagrantly defying industry "wisdom", which comes from a group of people far too focused on what each other is doing.

The problem, I think, is this: when the innovations are pursued on the basis of their low marginal costs, they tend to end up having marginal value too. Palm hit the innovation ball out of the park with their first generation PDAs. They scored a series of base hits with their upgrades through the Tungsten series. Palm has the customers and retail channel (for now); the sentiments quoted above say that they should use them to innovate within the bounds of the PDA or smart phone paradigm. But we have reached the point where the value of the next "PDA innovation" is not enough to get you on base -- not in a game where a base hit consists of a $200 retail purchase by a consumer.

The true destiny of the PDA is not to accrete laptop like capabilities. It is to become a cheap commodity. The world needs a Palm m505 for $19.99; not a Life Drive (just discontinued last month) for $399. That is the true meaning of convergence: PDAs have become marginal appendages to phones; their job is to sell phones.

The idea that PalmOS should become more like PocketPC and accrete new features only makes the situation worse. As the sales of PDAs plummet, both Palm and PocketPC will suffer, but PocketPC is destined to drop even faster.

The problem for a company like Palm is not that money cannot be made with a product whose fundametal retail value is destined to plummet. The problem is that money cannot be made with a conventional tech company culture, which is biased towards on stuffing as much features and functionality into a product as will fit. The best thing would be for Apple to buy a nearly moribund Palm for a song.