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Palm decides to alter its strategy

Sony representative Yuka Komatsu holds the company's latest PDA product which includes a small detachable keyboard. With a growing number of competitors in the market, Palm is looking for ways to make its business operating strategy more efficient. PHOTO: AFP

Palm Inc, the worldwide leading manufacturer of handheld computers, is hoping to finally put last year's disappointing results behind it.

With a new hardware platform and a completely renewed operating system ready for market, Palm hopes to knock its competitors, particularly Microsoft, down a few notches.

Indeed, last year software giant Microsoft's PocketPC, which is licensed out for manufacture to various hardware firms, put Palm's market lead to the test, with Palm losing significant market share to PocketPC producers such as Compaq, with its popular iPAQ. Yet beyond just the competition, Palm experienced a general weakness in sales that help to ensure that revenue lagged behind Wall Street expectations.

Palm, based in the US, produces Palm brand handheld computers on its own, but also licenses the Palm technology to other manufacturers, including Sony, Handspring, Samsung, and Kyocera. In order to defend the overall platform against the incursions of PocketPC technology, Palm Inc has in recent months split itself into several units. Palm Inc, the parent firm, is responsible solely for producing the final consumer devices. Like other manufacturers, it will have to license the operating system from PalmSource. "We have thereby insured that other license holders will not be disadvantaged," said David Nagel, head of PalmSource.

No one believes that new licensing practices alone will suffice to stop the market share encroachment of PocketPCs, though. Palm's technology, which is based on a "DragonBall" chip from Motorola and a technically antiquated 16-bit software system, has aged well over time.

"Palm has relied on the DragonBall chip for too long," says Todd Kort, an expert from the market research institute Gartner Dataquest in a recent interview. "This chip is ancient."

Down the road, the Palm community will be following the PocketPC's lead to the technology of British chip designer ARM, which runs up to 20 times faster. Chipmakers Intel and Texas Instruments, as well as legacy provider Motorola, will in the future be producing the ARM chips for Palm compatible devices. This means that Palm license holders will have a broad spectrum of microprocessors from which to choose, ranging from an inexpensive 75MHz chip to a high-powered processor that runs at over 200 megahertz.

This additional computational power is required by Palm developers not so much for the traditional address book, calendar, or notebook applications, but rather for multimedia. The Spartan pocket computer is destined to become a mobile entertainment center, capable of playing back music and videos, serving as a digital camera, or even a mini videogame console.

"Entertainment will, behind information and communication functions, become the most important application for Palm Computers," PalmSource head Nagel says confidently.

To accompany the new, more powerful ARM chips, PalmSource will be contributing to the platform a fully remade 32-bit operating system, the new Palm OS 5.

"I don't want to pick on the current Palm System [4.1], but it appears that an upgrade is overdue," says Neil Strother, an expert with the American market research institute Cahners In-Stat Group.

The new system software, which will be made available this summer to developers from Palm's partner firms, will be more agile with multimedia elements such as audio and video files. Based on requests by the various firms, it will also offer better encryption for sensitive data. The new Palm system will furthermore support modern networking technology such as WiFi (802.11x) and Bluetooth.

Despite the higher level of computing power, the new Palm computer will not require more energy than Dragonball-based devices.

"Network connections will still guzzle quite a bit of energy, but the other features will hardly affect battery life," Nagel promises.

"For PocketPCs, battery life is usually given in hours. For Palm compatible handhelds, the battery life will remain at several days."
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