Palm and Microsoft – a recipe for innovation?

Today’s announcement that Palm will build a Windows Mobile version of its Treo smartphone is representative of a significant change in the industry. Palm was a company built on a vision of delivering a very specific user experience, characterised by simplicity, synchronisation and, more recently, rich communication. Until a couple of years ago this meant an integrated approach to software and hardware development which differentiated Palm from OEM competitors manufacturing very similar products on the Windows Mobile platform. Now Palm is joining those same ranks of hardware providers.

Palm will continue to offer its Palm OS smartphone product (the Treo 650) and its wider range of Palm OS-based handheld computers (such as the LifeDrive), but suggestions of future devices based on this platform were noticeably absent from today’s press conference. Even if Palm was to actively expand its Palm OS range in the future, the hardware and software development teams have been on divergent courses since the company split into separate independent entities a couple of years ago.

In the early days of this split, the separation was merely a question of corporate structure, but the gulf between the two has become wider and wider. This has been underlined by the recent acquisition of PalmSource by Japanese mobile browser company Access.

Given the confusion over the development roadmap for the Palm OS, it is easy to see how Palm’s hardware business lost faith in its sister company’s ability to deliver a modern OS for smartphones, let alone the sort of closely integrated experience which defined previous Palm products.

Setting aside the novelty value of two former competitors – Palm and Microsoft – burying old differences, it is difficult to see how this can be a positive move for Palm. I can’t help but feel it has been driven by a perceived need within Palm’s executive group to capitalise on Microsoft’s marketing expenditure. The actual specifications of the Windows-powered device are still under wraps, but I suspect these marketing benefits will come at the expense of the overall user experience.

This was brought home by some comments made by Ed Colligan, one of the founding forces and now CEO of Palm, at the end of today’s press conference in San Francisco.

Sharing the stage with Bill Gates and Denny Stringl, CEO of Verizon Wireless, Colligan told the audience of press and analysts that the development of this new Treo had been driven by the capabilities of the Windows Mobile platform. Leaving aside the debate over how capable a platform Windows Mobile really is, the principle in question here is whether the idea of developing a product around a platform, rather than a platform around a product, is compatible with the so-called ‘Zen of Palm’ which has so long defined the company.

I’ve had the opportuity to interview Colligan on several occasions dating back to 1996 (shortly after the release of the original Pilot) and was always struck by his awareness of user experience issues – he always seemed to recognise the priority of delivering great products rather than just great technology.

Back then Colligan led the marketing team, having helped found the company alongside Jeff Hawkins (the technology visionary) and Donna Dubinsky (the CEO). When Hawkins and Dubinsky left to found Handspring, a rival mobile computing company, Colligan followed shortly afterwards.

At Handspring, Hawkins, Dubinsky and Colligan recognised that the PDA market was dying around them, crushed between price competition from Microsoft and its OEMs and the enhanced capabilities of smartphones. Seeing this trend, the team laid the foundations for the Treo line of Palm-powered smartphones, developing the VisorPhone accessory (which turned a standard PDA into a phone device) and later the first fully integrated Treos.

When competitive pressures finally forced the acquisition of Handspring by Palm, Colligan became the senior executive looking after the operational aspects of the business, while Dubinsky and Hawkins took a back seat. Somewhere along the way, however, it appears Palm’s original markeing guru has lost his affinity for the user experience.

Palm made an attempt to stress the ‘unique’ features it is adding to Windows Mobile, but as far as I could ascertain from the demonstrations given, the most significant of these seemed to be the ability to dial by name rather than number. Forgive me for not being wildly excited by this, but it is difficult to see Palm maintaining the integrity of its margins and its position as a differentiated hardware provider on the basis of a few software tweaks.

There are positive aspects to this announcement. Some genuine thought seems to have been given to the service integration aspects. The Windows Treo will be exclusive to Verizon Wireless’ EV-DO network for some months and, in return, Verizon has clearly invested significantly in making sure its sales staff will be properly briefed on the product and it will integrate with its network services.

Microsoft is also aligning the development of its mobile platform with the rest of its software portfolio, meaning that the mobile capabilities of Exchange will evolve in tandem with the server technology. The result should be a genuinely integrated Outlook experience on the Treo, including access to existing contact directories and e-mail folders for corporate customers.

From Microsoft’s point of view, a lot of this has been driven by the need to find a hardware company capable of providing a credible alternative to RIM’s Blackberry devices in the enterprise market. Listening to Bill Gates at the press conference, I got the distinct impression that mobile email has become a key strategic priority at Redmond, similar to the way in which ‘the browser’ became such a focal point in the late 90s. It often takes the runaway success of a competitor to spur Microsoft into action, but once the wheels are in motion, it can bring considerable resources to bear.

I will freely admit that some of my negative sentiment for this announcement is rooted in a personal admiration for Palm as a company and a dissappointment that it has lost sight of the values which defined it. I purchased one of the first Pilot products to reach the UK back in 1996 and was instantly captivated by its single-minded focus on a very specific problem: quick access to PIM data and seamless synchronisation with the PC.

It is hard to see how Palm, with its current strategy, will ever again develop a product with such a pure a user experience. Of course, the problem today has evolved somewhat: this is no longer just about PIM and PC sync, but the opportunity to compete through a superior experience remains as compelling as ever.

The Windows Treo is scheduled to ship in early 2006, exclusive to Verizon Wireless for several months. Pricing has not yet been confirmed, but it is expected to be higher than the existing CDMA2000 1x Treo. A W-CDMA version for international markets is planned for H2 2006.

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