Can HP & Palm take on the iPhone?
May 8th, 2010
Daniel Eran Dilger
Some people seemed offended that I’d present a less than enthusiastically optimistic take on the chances that HP’s acquisition of Palm could be anything other than a successful explosion of synergy that will challenge Apple. But what else do we know about HP & Palm? Let’s ask technology strategist Michael Gartenberg.
Engadget republished Gartenberg’s take on the merger, originally written up on his Entelligence blog, so you know it’s palatable to the mainstream of tech readers. Sure enough, it’s the same kind of pollyannesque exuberance that’s been emanating from every corner of the globe (except from my corner, that is).
“HP is no stranger to mobility” Gartenberg writes. “The iPaq was once a defining mobile product — but over the years the company has been unable to replicate that success with similar efforts in as the dynamic shifted from PDAs to phones. Buying Palm is a quick way of getting back in the game.”
Is that really the case?
HP’s history in mobility
In his introductory paragraph, Gartenberg linked to a “happy birthday Pocket PC” article he wrote back in April, which presented Microsoft’s Pocket PC initiative as beginning in April 2000 (a year and a half before the iPod, for reference). However, Pocket PC was really just a rebranding of Microsoft’s already failing Windows CE plans from 1996, this time aimed directly at the then successful Palm Pilot.
So ironically, HP is buying its former competitor from a decade ago, the very one it set out to best with its partnership with Microsoft. Back then, today’s HP was HP and Compaq, and both companies invested in Microsoft’s ground floor opportunity to beat Palm at the PDA game. HP shipped a Journada line of Pocket PC devices, while Compaq introduced its iPAQ (named after the iMac, get it?). They were joined by licensees Casio and Symbol (the company that made the WinCE EasyPay devices Apple Retail began using back in 2005, and recently discontinued in favor of its own iPhone-based devices).
I managed to win a Compaq Windows Mobile device in 2000 at a promotional event. I also had a Palm V. While the Pocket PC thing had CF slots, a color screen, and most likely a faster CPU and more RAM, it was a terrible device that ate up batteries, was thick and boxy, and was maddening to use. I dropped it back in the box and returned to my Palm V, which was ultrathin, solid, lasted nearly forever on a charge, and was simple and elegant to use. I narrated my first motorcycle accident back in 2004 from the hospital bed using my Palm V’s Graffiti.
Palm’s history in mobility
In many ways, the Palm V was for 2000 what the iPad is for 2010: a tremendously great product with perceived failings that were wildly overshadowed by its accessible utility and joy of use. Unfortunately, after delivering the Palm V, Palm lost its way and began ineffectually dabbling in impractical Mobitex wireless devices (Palm VII) on the high end and cheap consumer junk to fill out volume. The market for PDAs also imploded when the dotcom bubble bursting, leaving no real market for PDA-only devices to flourish.
While HP and Compaq kept churning out slightly faster hardware running Microsoft’s awful WinCE Pocket PC software to a tiny audience of people interested in buying single purpose handheld curiosity, Palm’s founder Jeff Hawkins independently created the next thing in mobiles (and a new market for Palm) at Handspring: a new smartphone based on the Palm OS, called the Treo.
By 2003, Palm finally realized that it desperately needed to transition from being a PDA vendor to being a smartphone vendor. It snatched up Handspring to obtain the Treo design. Much like Apple’s earlier acquisition of NeXT, the deal brought Palm’s original founder back, along with the executives Hawkins had originally left with after he lost faith in Palm’s leadership back in 1998 (including Donna Dubinsky and Ed Colligan).
The new Palm immediately set the Treo line on fire, launching the Palm OS as one of the first and highest regarded smartphone platforms available. Of course, the only other options were Symbian and Windows Mobile.
At the merger, Todd Bradley, Palm’s “Solutions Group” president and chief executive said, “This is a merger of leaders — the world’s leading maker of handheld computers and a global leader of Palm OS based smartphones.” Bradley took over as Palm’s chief executive, Hawkins became its new chairman and “chief product officer,” Colligan became the leader of its smartphone operations, and Dubinsky served on the board.
Post merger disaster
Palm subsequently tanked, making a series of poor decisions that split the company in half as hardware and software companies; let its Palm OS lead in smartphones rot while investing millions in a successor that went nowhere; churned out a confusing series of Palm devices that weren’t very interesting; and eventually left the company open to licensing Microsoft’s WinCE in 2006.
By that time, the “merger of leaders” had fallen apart. Hawkins and Dubinsky had left to start an unrelated software company, and Palm’s chief of failure Bradley escaped to HP to lead its Personal Systems Group leaving Colligan to take over as Palm’s CEO in 2005.
By then, even Sony had grown tired of trying to license the Palm OS, canceling its five year CLIÉ program. Colligan went on to lead Palm to deliver the failed Lifedrive, a sort of PDA with a hard drive intended to act like an iPod, followed by the aborted 2007 Foleo, intended to be a Linux-based sub-notebook that could connect to a Treo. He then famously derided Apple’s attempts to enter the smartphone market, then slinked away when the iPhone appeared and decimated Palm’s remaining Treo business.
Like Gil Amelio, Colligan’s best decision might have been bringing on Jon Rubinstein, who led the development of webOS and introduced the new Palm Pre before taking over Colligan’s role as chief executive. By 2009, Palm had reverted from a big dumb company out ideas back into a nimble fresh company more like Hawkin’s Handspring, and similarly in need of cash.
Pre merger disaster
Having ventured through that history, it’s now time to take another look at Gartenberg’s additional comments on the viability of HP’s Palm acquisition. “In addition to Todd Bradley, the former CEO of Palm who now leads HP’s Personal Systems Group,” Gartenberg writes, “there are many Palm alumni at HP. This means that there should be a relatively smooth transition and overall good cultural fit. That’s important because time is of the essence — the market won’t wait around for HP to integrate Palm.”
But wait, Bradley has nothing to do with Rubinstein’s Palm, which created the webOS and Pre and turned it around from its previous, disastrous course that had resulted in the death of the original Palm OS and the ridiculous licensing of Windows Mobile. Those tragic decisions occurred under the leadership of Bradley himself.
It was Bradley who presided over Palm’s acquisition of Handspring, and who appeared in retrospect to have done everything wrong, converting the successful Handspring Treo from a great idea with potential into a short-lived Palm product that was suffocated by corporate inaction and safe-decision foolishness, all within a span of just three years.
And so now Gartenberg thinks that Bradley will somehow take the poorly selling Pre and cash-hemorrhaging remains of Rubinstein’s new Palm and integrate them into HP’s dead end Windows Mobile smartphone and PDA business, and somehow deliver a very different kind of result that bears no resemblance to the Handspring merger he previously botched?
“HP’s short term challenge,” Gartenberg writes, “is to survive the mobile market’s velocity. There is precious little time to integrate Palm into HP offerings, decide what to do with existing HP products like the Windows 7-based Slate, Airlife Android smartbook, and iPaq handhelds, and create an effective marketing message while increasing customer and developer evangelism.”
Challenge? How about ‘mission impossible’? At Palm, Bradley had one Palm OS and was simply adding Handspring’s smartphone to its PDA lineup. Now he’s tasked with taking HP’s mess of a mobile device strategy ranging from netbooks to slates to smartbooks to PDA and smartphones, running three completely different operating systems (WIndows 7, Android, Windows Mobile), and integrating a second line of smartphones running a fourth operating system.
Gartenberg asserts that Palm’s problem was that it lacked the resources to compete against richer competitors like Apple, Google and Microsoft, and that its partnership with HP will enable it to reach new channels backed by a rich company. That’s the common thinking, but doesn’t HP already have a lot invested in selling all the stuff its already selling?
Can HP simply cancel its Windows 7 and Windows Mobile product lines and feed all those customers webOS devices instead, including devices that don’t even yet exist such as tablets and netbooks? The “webOS works quite well on phones but it’s going to be interesting to see how it plays on new emerging categories of connected devices,” Gartenberg muses.
Will Palm + HP another Compaq, Be?
My usual critics complain that I never have anything good to say about Apple’s competition. Remember however, that while I was not so impressed by Palm’s new webOS and its ability to take over the market, I did note that it is in Apple’s interests to have as many competitors in the smartphone arena as possible.
Apple doesn’t have a monopoly that demands it crush all potential new competitors. Instead, it’s fighting against monoculture competitors ranging from Symbian to Android to Windows Mobile/WP7. The more manufacturers there are promoting their own platforms, the easier it is for Apple to deliver a premium offering to coax their customers away.
It’s in Apple’s interest to have the webOS remain viable. It prevents HP (or whoever else might have bought it) from becoming another ally to Android or WiMo. But the facts simply don’t support the idea that HP will do anything with the webOS other than incompetently crush it to death, just as HP crushed Compaq and Palm crushed Be and Handspring.