The Two Most Dangerous Words in Technology Marketing

"Just wait."

So powerful.  So easy to say.  So appealing when your current products are behind the curve, and the press and analysts are beating you up about it.  You can shut up the critics instantly if you just drop a few hints about the next generation product that's now in the labs.

So dangerous.

The phrase "just wait" ought to be locked behind glass in the marketing department, like a fire extinguisher, with a sign that says, "Break glass only in emergency."  And then you hide the hammer someplace where no one can find it.

Saying "just wait" is dangerous because it invites customers to stop buying your current products.  You're basically advertising against yourself.  If your company is under financial or competitive stress, the risk is even greater because people are already questioning your viability.

This danger is especially potent in the tech industry (as opposed to carpeting or detergent) because tech customers worship newness, and they use the Internet aggressively to spread information.  One vague hint at a conference in Japan can turn into a worldwide product announcement overnight.

 This danger has been well understood in the tech industry dating at least back to 1983, when portable computing pioneer Adam Osborne supposedly helped destroy his PC company by pre-announcing a new generation of computers before they were ready to ship (link). Palm reinforced the lesson in 2000 by pre-announcing the m500 handheld line and stalling current sales (link).

But maybe memories have faded, because we've been hearing "just wait" a lot lately:

--Nokia announced that it's switching its software to Windows Phone, and promised new devices based on the OS by this fall.  Nokia executives have hammered that message over and over, even making detailed promises about features including ease of use, battery life, imaging, voice commands, cloud services, and price (link).  Some execs have even told audiences that they have a prototype in their pockets, but coyly refused to show it (link).  What's the thinking here?  Does refusing to show the product somehow nullify the fact that you just told everyone not to buy what you sell today?

--In February 2011, HP pre-announced a series of new smartphones that were supposed to come out over the next year.  The most attractive-sounding one, the Pre3, was supposed to ship last.  Not only did this obsolete HP's current products, but it also overshadowed the other new products HP launched in the interim.  HP's interim smartphone sales turned out to be so bad that it killed the business before the Pre3 could even launch in the US.

--Speaking of HP, the company just announced that it will be selling its PC business because it's not doing well.  As Jean-Louis Gassee pointed out, that's like inviting customers to switch to another vendor who actually wants to be in the business (link).  That forced HP executive Todd Bradley to boost confidence by going on tour pre-announcing himself as future CEO of the theoretical spun-out company, even though HP's Board won't even meet to decide on a spinout until December (link).

--RIM announced that it's moving BlackBerry to a new operating system, which will apparently not run on its existing smartphones.  It has spent much of the last year telling people how great all the new features of the OS will be.  The company also pre-announced that it will enable Android applications to run on its future phones.  Meanwhile, market share of its current products has been dropping steadily.  The latest rumors say RIM's new phones will not be out until Q1 of 2012 (link), meaning the company has probably sabotaged its own Christmas sales for 2011.

--Microsoft announced that it's replacing Windows in about a year.  That's not necessarily a problem, since it says the new version of Windows will run on existing hardware.  But Microsoft also said it's introducing a new development platform based on HTML 5.  This set off a huge amount of teeth-gnashing among today's app developers worried that their skills are about to become obsolete (check out the excellent overview by Mary-Jo Foley here).

Why are companies doing this over and over?  Sometimes you have no choice.  For example, Nokia couldn't lay off the Symbian team without saying something about its OS plans.  However, it didn't have to be so noisy about the plans, so I think that wasn't its only motivation.

Sometimes the cause is a mismatch between the needs of a hardware business and the needs of a software business.  If you're making a software platform, you pre-announce it as early as possible to build confidence and get developers ready at launch.  But if you're selling hardware, you want to keep new stuff a secret until the day you ship.  When you mix hardware and software, you are pulled in both directions.  I think that disconnect probably affected Nokia, which is now run by a CEO who worked in software for most of his career. 

Companies also sometimes pre-announce products because it placates investors.  Wall Street analysts always ask what you're developing in the future, and executives sometimes can't resist the urge to tell them and prop up the stock price.  Ironically, this may help the stock for a quarter, but often has the long-term effect of hurting a company's value when the pre-announcement slows sales.  But each CEO always seems to believe he or she will be the one who gets away with it.  I believe investor pressure was one of the drivers when Palm pre-announced the m500, and I believe it also explains some of the pre-announcements by HP and RIM.

Sometimes internal company politics also plays a role.  An executive may pre-announce a product in the hope that the announcement will put more pressure on the development team to deliver "on time."  Or a business leader will pre-announce something to pre-empt internal competition from another group.  I've seen both of those happen at places where I worked.  Needless to say, any company that allows internal politics to drive external communication has much bigger problems than its announcements policy.

Pre-announcements also create other problems.  They educate the competition about what you're doing, and give them time to prepare a response.  This is especially dangerous if you're trying to come from behind, which is usually the situation when a company pre-announces.  So a competitor is already out-maneuvering you, and now you're giving them more notice of your plans?

But I think the worst effect of a pre-announcement is that it invalidates any signals you get from the market.  You can't actually tell if your underlying business is healthy or not.  Did HP's smartphone sales slow down because people hated its products, or because HP had invited customers to wait for the new ones?  Have BlackBerry sales been suffering because customers don't want them, or because RIM invited people not to buy?  Was the enormous drop in Nokia smartphone sales due to flaws in the products, or due to Nokia's relentless promotion of new phones that aren't yet shipping?

There's no way to tell for sure.  And so, if you're running one of those companies, you don't know whether or not you should panic -- or more to the point, what exactly you should panic about.  You have now trapped yourself in limbo, and there is no way out until your new products ship.

So, as you can guess, I am generally against pre-announcements.  But they can be very powerful, and there are a couple of special cases in which they're appropriate.


When it's safe to pre-announce

If you're entering a new business.  If you don't have any current sales to cannibalize, it's relatively safe  to pre-announce.  You're still alerting the competition, which I dislike, but at least you won't tank your current business.  Apple pre-announced the first iPhone and iPad before they shipped, but you'll notice that they've been very secretive about the follow-ons.

A variant on this is when a competitor is ahead of you in a new category and you want to slow down their momentum.  You pre-announce your own version of their product, in the hope that customers will wait to get it from you rather than buying from the competition.  This can be especially effective in enterprise markets, where IT managers tend to develop long-term buying relationships with a few vendors.  IBM used this technique relentlessly during the mainframe era, and Microsoft picked up the habit from them.

Pre-announcements are less effective against competitors in consumer markets, where people are sometimes driven by the urge to buy now.  They also don't do much in cases where it's easy to switch vendors.  For example, Google pre-announcing a web service isn't likely to stop people from using competitors to it in the interim.  A pre-announcement can intimidate venture capitalists, though, and I wonder if Google doesn't sometimes announce a direction in order to hinder a potential competitor's ability to raise money.

If there is a seamless, zero-hassle upgrade path.  If customers will be able to move easily to your new products, without obsoleting what they use today, and without big expense, a pre-announcement can be safe.  For example Apple generally pre-announces new versions of Mac OS, and it's not a major problem because currently-available Mac hardware can run the new OS.  Where RIM went wrong with its OS announcement is that its current hardware apparently can't run the new OS.  So RIM has announced the pending obsolescence of everything it sells today.

If you are messing with the mind of a competitor.  Theoretically, if you're dealing with a competitor who's very imitative, you can make them waste time and money by leaking news of future products that you don't actually plan to build.  The competitor will feel obligated to spin up a business unit to copy your phantom product, leaving less money to respond to what you're actually doing. 

When I was at Apple, we used to joke that we could waste $20 million a pop at Microsoft by seeding and then strenuously denying rumors that we were working on weird but plausible products.  Handheld game machines, anyone?  Television remote controls?  Apple today is so influential that it could manipulate entire industries by doing that, not just individual companies.

But when you do this you gradually erode your credibility with your customers. If the rumor is plausible enough to dupe a competitor, it will also dupe some customers, who will then be disappointed when you don't deliver.  Eventually you won't be able to get customers excited when you announce real products.  Look at the skepticism people often express today when Google announces a new initiative.

The most famous case in which misdirection supposedly worked was not in business but in international politics.  Some historians say that the collapse of the Soviet Union was hastened by the huge investments it made trying to keep up with Reagan Administration defense initiatives, some of which had no hope of actually working, but which still seemed plausible enough that the Soviets felt obligated to cover them. 

I'm not so sure that really caused the collapse of the Soviet Union; big economic changes are usually driven by big economic forces, not by tactics.  But more to the point, you're not Ronald Reagan, this isn't the Cold War, and if you try to pull off a fake this complicated you'll probably just confuse your customers and employees.

So unless you're entering a new market, or have a seamless low-cost upgrade path to the new product, your best bet is to grit your teeth, shut up, and next time plan better so you'll be ahead of the market instead of playing catch-up.

The Part of Palm that Smartphone Companies Should be Bidding For

Anytime a CEO gets ousted in disgrace, his or her pet projects are vulnerable to a quick trip to the gallows if they falter.  Mark Hurd was the CEO who bought Palm, so it was at risk from the moment Hurd left.  HP's mobile device performance had not been good this year -- the Veer smartphone launched and vanished on the same day, and the TouchPad turned out to be a sales disaster.  If Leo Apotheker had chosen to invest further in the business, it would have turned into his responsibility.  It's far easier to just walk away.

You can make an argument that HP should have given the business more time, and it's a shame that we'll never get to see the Pre 3.  But Palm's sales have been troubled for years, and I think its fundamental mistake was that it tried to be too much like Apple.  From the start, Pre was aimed at the same users and the same usages as the iPhone (even down to a failed effort to tie the phone directly to iTunes).  HP proved that most people don't want to buy an incremental improvement to the iPhone that can't run iOS apps.

Then just for kicks, HP went and proved the same point again with the TouchPad.

The lesson to other mobile companies, I think, is that unless you're a low-cost Asian vendor, you need to differentiate from Apple, not draft behind it.

I'd love to see Web OS live on, but the hardware debacle makes that less likely.  As I mentioned the other day, licensees choose an OS because they think it'll generate a lot of unit sales for them.  Since Web OS couldn't do that for HP, who else would want to license it?

If you believe that every smartphone company needs to own its own OS, we ought to see a mad bidding war between LG, HTC, Sony Ericsson, Dell, and maybe Samsung to buy Web OS.  (The loser could get RIM as a consolation prize.)  Maybe a buyout will still happen, but I think HP has probably been quietly shopping Web OS for a while, and if there were interest it would have tried to close a deal before today's announcement.

(By the way, HTC, if you do buy Web OS, you should insist that HP give you the Palm brand name as well.  It's still far better known than the HTC brand in the US.  The same logic applies for LG.)

But I'm not persuaded that buying an OS is the right way to go for any smartphone company.  Turning yourself into a second-class imitation of Apple isn't a winning strategy, especially if your company doesn't know how to manage an operating system.  (Case in point, look what it did to HP.)  You can create great mobile systems without controlling the OS; all you need is a great system development team and the freedom to put a software layer on top of whatever OS you use.

That means the real crown jewel in the Web OS business unit is the system development people -- the product managers and engineers -- that HP just threw in the garbage.  In my opinion, that's the part of Palm that smartphone companies should be fighting for.

Quick Thoughts on the HP Announcement

I like the products, I don't like the event.


What's impressive

I like the devices.  I am disappointed that the tablet doesn't have a stylus, but HP is clearly going for the media player space, and it's a worthy competitor there.  The Android tablets and PlayBook start to look kind of weak in comparison.

I like the idea of a smaller smartphone.  It's something Apple should have done with iPhone.  (It did the same thing very successfully with iPod; why not iPhone?)

I like the integration between the phones and tablets. That's a smart move.  The more HP can make this a competition of product families, the more of a disadvantage the Android cloners will be at.

I like the apparent attention to detail in all of the products.  As you'd expect from a team headed by a former Apple guy, HP/Palm understands hardware-software integration and how to make a product feel good to use.  Even if you never buy one of the HP products, you'll benefit from what it's doing because HP is challenging everyone else in the industry to step up their design and integration skills.  Samsung and Lenovo, take note.

And I love the idea of putting this same OS on personal computers.  It's bold, it's scary, it's...uh, it makes HP look a lot like Apple.  Maybe instead of "Think Beyond" they should have called the event "Think Similar."

And how ironic that HP is moving toward having its own OS just as Nokia is moving toward (reportedly) running someone else's.


What's not impressive

I disagree strongly with the timing and content of the announcement.  I am not talking about the length of it.  Yeah, they went too long, but it's not a big deal in the ultimate scheme of things.  I think there's a much deeper problem here.  Good marketing is like a fan dance -- you don't reveal as much as people think you do, and you always leave them wanting a bit more.  HP built up the expectation that its new products would be available immediately, and then announced stuff that will ship sometime in summer, if not later.  We don't even know prices yet.  This gives competitors a huge amount of time to react, and more importantly the products themselves are going to seem old by the time they ship.

This isn't a fatal mistake, but I think it would have been far more effective if HP had discussed the products only in a "secret" event for developers.  The news still would have leaked, but rather than being disappointed we would have been tantalized and eager to hear more in the months to come.

HP may be developing products more like Apple, but it's still marketing like HP.

Quick thoughts on Palm and HP

It could have been worse. A lot worse.

Many of the companies rumored to be looking at Palm would have bought it mostly for the patents or the brand, and tossed aside everything else. But I think there's a good chance that HP bought the company to keep running it. HP has a long history of activity in the mobile devices market, but hasn't had a lot of knockout success there lately, other than in notebook computers. Palm makes it a player again, or at least potentially a player.

The press release makes it sound like HP was especially interested in the software side of Palm rather than the hardware. WebOS was mentioned six times (compared to one mention of Pre), and Todd Bradley, EVP of the Personal Systems group at HP, was quoted in the press release as saying, "Palm's innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices."

Sure sounds to me like they're planning to deploy the OS across different classes of devices. And tablets were reportedly mentioned specifically in the press conference after the deal was announced.

So overall, I think Palm users and developers should feel good about the deal. Obviously, everything will depend on execution. But at least the company's not being immediately dismantled, which could easily have happened.

Here are some other thoughts on the deal:

Upside for Palm device sales. With HP's huge sales infrastructure, the Pre can move quickly into a lot of interesting places Palm couldn't easily reach -- especially corporate sales, more international markets, and more operator deals.

Ominous news for Microsoft. Between the gains for Android and the Apple-driven trend toward mobile companies owning their own platforms, the market space for Microsoft's mobile software continues to shrink. But more important than that, HP is the number one Windows vendor, and it now owns its own operating system. That's not an immediate crisis for Microsoft, but it should keep someone there awake at night.

Can the old dog HP learn new tricks? Historically, HP has been pretty close to inept in two areas that Palm knows how to run: Managing a consumer developer community, and creating a great user experience by combining hardware and software. If HP is wise, it will keep the Palm teams intact and let them gradually spread those skills to the rest of the company. On the other hand, if HP tries to "help" the Palm folks execute, it will almost certainly drown them in process and bureaucracy.

What is HP's goal in personal systems? The thing that surprises me most about the Palm purchase is that the rumor mill in Silicon Valley said HP was moving away from differentiation in PCs. The company has laid off many of the Apple refugees who had come in to help run the PC business, and the quirky advertising seems to have faded into the background. Supposedly, HP was much more interested in emulating Acer than Apple in PCs. But the Palm deal positions HP as a much more direct competitor to Apple.

Maybe HP sees mobile as a different marketplace, where investment and innovation can pay off better.

PS: I won't even get into the irony of former Palm CEO Todd Bradley now controlling the company again. Let's just say Silicon Valley is a very small place.

Lessons From the Fall of Palm

What went wrong?

Palm is now apparently prepping itself for a remainder sale, or new sugar daddy, or some other sort of deal that will change its current trajectory. I wish them well, and I hope they can remain independent and go on to accomplish great things in the future. But whatever happens, it's clear that the current incarnation of Palm has failed. Almost everyone I talk to in Silicon Valley is already speaking of the company in the past tense.

Most of the comments I've seen online blame the company's failure on the high marketing costs associated with selling hardware:

--Ed Snyder, an analyst with Charter Equity Research, told the New York Times: “They poured all their resources into developing a killer product. But they didn’t have the resources left to go to market.” (link)

--Engadget called Palm "a company that has more talent, history, and bright ideas than it has cash and customers." (link)

--Charlie Wolf of Needham & Company told Bloomberg: "It can't get scale. It doesn't have the resources to market the Palm OS and the Pre in a way that would break through the noise." (link)

--Even Palm CEO Jon Rubinstein blamed the problem on marketing challenges: "Palm webOS is recognized as a groundbreaking platform that enables one of the best smartphone experiences available today....However, driving broad consumer adoption of Palm products is taking longer than we anticipated." (link)

The quotes reflect the tech industry's stereotypical view of hardware businesses: They require huge marketing budgets, making them incredibly high-risk, high-cost investments. That's why you see thousands of software startups in Silicon Valley and only a handful of hardware ones.

I think that's nuts. Hardware companies like Pure Digital (maker of the Flip camera) succeeded with virtually no marketing budget. Why? Because they made appealing products that filled a particular customer need. If you do that, hardware is easy to market virally. I think the lesson from Palm's failure isn't "making hardware is dangerous," it's "lack of focus in a small hardware company is dangerous."

I don't want to turn this post into an anti-Palm diatribe. As I said, I hope they survive, and I have enormous respect for the people who work there. But in the spirit of helping everyone learn from Palm's situation, here are the five lessons I think we should all take away from Palm's struggles:


1. Understand what problem you're solving. I asked this question when the Pre was first announced, and I'll ask it again now: What compelling problem does the Pre solve for what customer? (link) It's easy to answer that for successful devices:

--BlackBerry = great e-mail on the go for mobile professionals

--iPhone = the best entertainment and browsing on the go (later extended to include apps)

--Flip = the easiest way to capture video and share it online

What's the short pitch for Pre? Go check the Palm website. As of April 18, it featured three different positionings right on the front page: "Social networking at its best," "Advanced 3D games," and "Work smarter, stay connected." So it's a business / social networking / gaming tool. For all of those millions of people who want to do serious business, 3D games, and Facebook posts all at once.

This isn't a recent problem. At the time of the Pre announcement, Palm advocates described it as a device for people who want better e-mail than the iPhone and better entertainment than the BlackBerry. The implication was that there's a big center to the smartphone market that's frustrated by the lack of a keyboard on an iPhone and the lack of a music player on BlackBerry. Re-read Jon Rubinstein's quote above: "webOS is recognized as a groundbreaking platform that enables one of the best smartphone experiences available today." The assumption there is that millions of customers are looking to buy a "smartphone experience," as opposed to a tool that solves a particular problem.

If that unsatisfied center existed, Pre would have sold like hotcakes.


2. Take care of your friends. When Elevation Partners took control of Palm, the company wasn't just a famous brand. It also had a fairly large base of loyal customers and developers who had stuck with the Treo through a lot of angst and adversity. The new Palm did very little to keep those people loyal. The developers weren't given any way to bridge their existing applications to the new OS. Faced with starting over on webOS or starting over on the much larger iPhone base, guess what they chose. And Palm, which once prided itself on simplicity, made the Treo to Pre migration process into the sort of marathon experience that we used to tease Microsoft about. Here are some of the instructions from Palm's own website (link):

Decide where you want to move your Calendar/Contacts

The Data Transfer Assistant moves your info out of the desktop organizer and onto your phone. From there, your phone sends the data to the web account of your choice.

Your choices: Google, Microsoft Exchange, or Yahoo!.
Need help deciding where your info should go?

Skip this step if you already have an online account where you want to move the info from your old desktop organizer.
Create an account for one of these web services:
Google

1. Go to Google.com: Create a Google account and set up a new account.
2. If you've never used Google Calendar, you'll need to sign in at least one time before proceeding. Go to google.com/calendar, and follow the login & activation steps until you see your calendar.

Microsoft Exchange for corporate users

Ask your IT Helpdesk for these four pieces of information.

* Incoming mail server name
* Domain name (if it's different from your incoming mail server name)
* Exchange username
* Exchange password

Yahoo! Calendar & Contacts

Contacts are transferred from Yahoo.com to the phone, but not from phone to Yahoo!

1. Go to Yahoo.com: Sign up for Yahoo! and create a new account.

Or back up your info to your online Palm profile

Ready to go - you already created an account when you set up your phone.

Set up the account on your phone

After creating an online account, add it to your phone. This ensures that your info moves correctly to the account.

1. On your phone, open Contacts.
2. Open the application menu and tap Preferences & Accounts.
3. Tap Add An Account and select the account you created above.
4. Enter the username and password for that account.

Sync your old device one last time

Skip this step if you do not have a previous Palm device.

To make sure you have the most up-to-date version of your info in Palm Desktop or standalone Outlook, synchronize your previous Palm device and your computer one last time.

Export your info using the Data Transfer Assistant

For fastest results, turn on Wi-Fi (if available) and plug in the charger before proceeding.

Download the tool: Data_Transfer_Assistant_1e.exe

After the download is complete, double-click Data_Transfer_Assistant_1e.exe in the location on your computer where you downloaded it.
Follow the onscreen instructions.
Note: When you connect the phone to your computer, some applications may launch automatically, moving the Data Transfer Assistant to the background. To return the Data Transfer Assistant to the foreground, click the Data Transfer Assistant icon on your computer's taskbar....

You can find some more discussion here.

This in itself wasn't a disaster. Any company has to set priorities, and Palm just didn't make the links to its legacy customers and developers a priority. But it meant Palm couldn't draw on a pool of friends to help it get sales off to a quick start. That put even more pressure on Pre to be a knockout hit from day one.


3. Move faster and slower. After the Elevation deal, Palm went through a very strange management transition. Jon Rubinstein was installed as Chairman and head of product development, Ed Colligan remained as CEO (so he was Jon's employee and boss at the same time), and Jeff Hawkins was supposed to remain as product guru. Palm said at the time that Jon would be the execution person and Jeff the visionary. "The combination of those two guys is one of the most dynamic... combinations on the planet," Palm said. Yeah, right. The real process was a creeping reorganization in which Rubinstein replaced the old Palm executive team in stages. I think Palm would have been better off with a single quick transition in which the new team was put in place all at once and given time to coalesce.

But if Palm moved too slowly on organizational change, it probably moved too quickly on product shipment. The Pre shipped without a finished development environment, frustrating the developers who were most motivated to create interesting software on it. And it had an OS that hadn't been tuned properly for performance, so even its most enthusiastic users had to apologize for its lack of responsiveness. Although there was a lot of pressure on Palm at the time to ship, in retrospect the company would have been far, far better off if it had waited a few more months and shipped a product that delivered a great user and developer experience.


4. What you do, do well. The old Palm's "zen" design principles said: "Find a problem, find the simplest solution, punt the rest." It was an appliance design philosophy translated into computing. The new Palm tried to boil the ocean. Its ambition to create a smartphone platform superior to iPhone forced it to compete on a very broad range of fronts, everything from OS to SDK to app store to hardware. Inevitably, Palm wasn't able to execute equally well in all areas, and some of the Pre's features were compromised due to lack of resources. Apple can get away with a flawed version one product because it has the financial resources to go back and fix its mistakes. Which brings me to the fifth lesson...


5. You're not Apple. Trying to beat Apple head-on is a rich man's game, the computing equivalent of fighting a land war in Asia. There are effective ways to compete with Apple on a budget, but they all involve avoiding or neutralizing its strengths, and targeting segments or tactics that Apple can't or won't pursue. Instead, Palm attacked head on. I'm picturing that Warner Brothers cartoon where Black Knight Yosemite Sam charges at full speed into the wall of a castle and bounces off flat as a pancake (link).


What it means for the rest of us

You'll notice that I didn't say anything about Palm's bizarre ads featuring a Borg hive queen (here and here). That's because they were a symptom, not a cause. When your product is right, the message will be simple and you won't need creepy ads to stand out. Often you won't need ads at all.

The mistakes highlighted by Palm are common in the tech industry. Here's what I think we should do about them:

--I know there are device companies out there right now where the employees are whispering to each other, "we've committed to shipping on a certain date, but the product won't really be ready." You know who you are. Don't let your company pull a Pre; speak up. If nothing else works, print this post and send it to your boss. The Board of Directors might fire you if you delay the launch, but they definitely will fire you if the product fails.

--I frequently talk with companies that are creating bundles of technologies rather than coherent solutions to problems (anybody want to buy a Verizon Droid? link). Ask yourself, who is my customer, and am I solving a problem that they care about deeply?

--I know investors who say, "I'll never touch hardware, it's too risky." Understand that you're missing opportunities where you could invest with a higher return, because valuations aren't being bid up by competing investors. The fault, dear investor, is not in our product category, but in our execution.


That's my take. What do you think? Where did Palm go wrong (if at all), and what do you think the lessons are for other companies?

The Palm Pre: Think Similar

Palm died. Palm OS died. Get over it.

Now let's talk about this new company, and product, that happens to be named Palm. I don't know if they'll survive or not, but they have a chance, and they're definitely interesting.

That was my overall impression after visiting Palm at CES 2009. The differences started with the meeting room itself. Rather than shelling out for a (very expensive) booth, Palm had an upstairs display room off the show floor. That in itself is not unusual; companies low on money often take a display room at CES so they can have some sort of presence at the show. Usually they get very little traffic, because you have to make an effort to find them.

But there was a short line outside Palm's room. A friend and I got into line, and the Palm folks asked us for our business cards. They went away for about 30 seconds, came back, and pulled us both out of line. "You can go right in."

I'm not sure why they did it, since neither of us are VIPs. But somebody was screening the cards and pulling out anyone whose name they recognized. That was the first sign that I was dealing with a different company -- although the old Palm was pretty well organized, that level of attention to detail would have been unusual.

The second difference came when we entered the room itself. A display room at CES usually is an empty space about 40 feet (13m) or more on a side, with one big presentation screen, some chairs, and a couple of demo stations along the walls. You can take in the whole thing in 30 seconds. Instead, Palm had divided its space into almost a maze, with little meeting rooms (lined with couches) and corridors, all set off by gauze curtains. Along the "corridors" were abundant food carts (with servers, another unusual touch), and small stations where employees were giving continuous Pre demos to groups of up to about a dozen people. You could get very close and intimate with the device, although no touching was allowed.

It felt like a technology harem.

I don't think the old Palm would have decorated quite like that, let alone shell out that much money for exhibit space in a time of layoffs and financial stress.

The presenters were extremely well briefed and disciplined, although they didn't feel robotic. They showed the features they wanted us to see, and wouldn't be baited into going further. The overall impression of the space and staff was extreme design consciousness, a bit of opulence, and intense discipline.

Very un-Palm-like. More like boutique Apple without the rock star CEO.


Think Similar

The theme continued in the product. The Pre does not look like the Treo or any previous Palm product. If anything, it looks like an iPhone with some of its limitations fixed. The design of the hardware, graphics, the fonts, the way things move on screen, and the touchscreen gestures are all elegant, and reminded me intensely of the iPhone. You can even do a pinch gesture to shrink and expand things, which I thought was patented by Apple (this shows why I'm not a lawyer).

Unlike an iPhone, you can run multiple applications at the same time and switch between them. There's a thumb keyboard built in. The battery can be replaced. The APIs are supposedly based on web standards, so many people should be able to program the Pre without learning a new OS. Palm says it will have a software store built in, but the app approval process won't be as restrictive as Apple's. Palm will also apparently allow companies to port other platforms, like Adobe Flash, to the Pre, which addresses another iPhone drawback. (There's a comparison table between the iPhone and Pre here, but it focuses mostly on hardware specs.)

In contrast to all the iPhone references, it's very hard to spot any Palm legacy in the Pre (other than the company logo). The calendar still compresses unused hours, which was one of my favorite Palm features. But literally that was the main similarity that I noticed.

The device won't run current Palm OS apps, although I think Palm is open to someone porting a Palm OS emulator to the device if they want to. But I don't know how you'd operate those apps without a stylus. The browser is based on Webkit, so no more Blazer (yay).

The design of the interface looks nothing like Palm OS. Palm's old design ethic was all about sacrificing beauty in order to produce maximum utility. The result was often extremely efficient but plain (okay, ugly). The new Palm treats aesthetics like Apple does -- the device has to be useful, playful, and beautiful. That's incredibly hard to design, but apparently Palm has imported enough Apple talent to pull it off (or at least to make the demos look good).


Will Palm survive?

Prior to CES, it was fashionable for a lot of people online to predict Palm's imminent demise. That was a misreading of how the world works -- we technology insiders lose interest in a brand long before the public does. Palm still has a strong name, and it will get a good hearing in the market.

So the real question is, is the Pre good enough to make Palm profitable? I think it's too early to answer.

For one thing, we can't touch the product yet. The canned demos were incomplete -- I didn't see the dialer or the software store, for example, and I don't know details of how the product will sync. The SDK hasn't been released, so we don't know what it will be like to create apps for the device.

But my biggest concern is about the strategy, not the product. I'm not sure who the customer is for the Pre. Dr. Rob Enderle took time off from diagnosing Steve Jobs' medical condition (link) to tell a San Jose radio station that the Pre is a better e-mail device than the iPhone and a better consumer device than a Blackberry. Which is probably true, but misses the point -- it's probably a worse entertainment device than the iPhone (because it doesn't have iTunes) and probably a worse e-mail device than RIM (because it doesn't have RIM's server infrastructure). So who exactly is it best for?

Mobile devices that sell well usually have a well-defined market of people who look at them and say, "that one's perfect for me." The Pre is intensely elegant, which intrigues aficionados like me, but there aren't enough of us to make a lasting market. Beyond that, it's apparently perfect for people who want a compromise between a Blackberry and an iPhone, but don't need the best of either. Who are those people? And are there enough of them to make a business for Palm? I honestly don't know.

I guess the old Palm installed base might be a first source of customers, but many of them have moved on. Although there's a lot of enthusiasm on the Palm discussion forums (for a wonderfully detailed article, check here), longtime Palm users don't appear to have a lot of compelling ties holding them to the new device. Their old apps won't work, and they'll have to learn a new interface. Usually when a company makes a transition like this without backward compatibility, the user base reads it as an invitation to consider alternatives. Palm cannot take them for granted -- and even if it could, they alone are not enough to sustain the company.


What it means for the industry

Regardless of whether Palm survives, I think the Pre does some important things to the industry. It's the first smartphone that matches the iPhone on overall UI aesthetics, and it fixes many of the drawbacks of the iPhone. Other smartphone companies will be under pressure to match the Pre's features. Mobile companies like Samsung and Motorola, which lack software expertise, look increasingly vulnerable to gradual share erosion.

I'm very hopeful about the application development model for the Pre. By basing its development model on web standards, Palm apparently will empower the world's vast base of web app developers to quickly create Pre applications. If Palm implements the APIs right, that is a very smart move. It aligns Palm with the forces of the web, and might even make Pre the preferred mobile development platform of the web app community.

I don't know if that alone can make the Pre a success -- mobile devices usually build a base first with a particular function and then branch into apps. But it gives Palm a much better shot than it would have had if it tried to create yet another proprietary platform. The brass ring in the mobile app world is getting the attention of the web app community, and Palm now has a shot at it.

Google, are you listening?


What to do if you're a user

Wait.

We'll learn tons more about the Pre as it gets closer to shipping. Apple's undoubtedly working on new iPhone products (I'm betting on a smaller device, like a Nano version of the iPhone), RIM's getting the Storm debugged, Nokia is finishing the N97, and there are rumored to be more Android devices coming.* If you're thinking about getting a smartphone, you're going to have a great selection later this year. Hold out until you understand more about your choices.

__________

*There are probably some more Windows Mobile products coming too, but does anyone care any more?

App stores and APIs: It's the ecosystem, stupid

If you make a web application or mobile platform, one of the trendiest things you can do is add APIs and a software marketplace to it so developers will extend your product. Google is previewing its application market for Android (link), T-Mobile USA has promised a new applications store for its phones (link), and many people I've spoken with believe Microsoft bought Danger in order to get its software store technology.

The idea of encouraging third party developers dates back at least to the early days of MS-DOS, but it was associated mostly with operating systems until Web 2.0 applications took off a few years ago. Google played a big role in that change, by exposing APIs to Google Maps that made it possible to embed maps in other web applications. That helped Google Maps quickly blow past established mapping services like Mapquest, while the installed base of Google Maps extensions made it hard for Microsoft's web mapping product to gain traction.

The drive for web APIs got another big boost when Facebook enabled developers to extend its functionality, driving an explosion of widgets for Facebook that helped it grow past MySpace to become the #1 social network in the US (at least according to Alexa).

The web app people all noticed Google's and Facebook's success and furiously started adding APIs to their products. Today it's unusual to hear about a new web app that doesn't have some sort of API story or future plan to add them.

In mobile, applications have an interesting history. Lately some new mobile players have generated huge attention for their application marketplaces. The chart below shows the one year growth in the developer base for a certain well-known mobile platform:



If you're like most people in Silicon Valley, you probably think that's an Apple iPhone developer chart. But actually it's Palm OS ten years ago, from 1998 to 1999.

Disturbing, isn't it? The idea that a platform could take off like that and then crash and burn...makes you wonder if the same thing could happen to the platforms that are popular today.

And in fact, if you look at the history of APIs on both mobiles and web apps, the failures are more numerous than the successes. If you're a developer trying to pick the right platform to create your apps on, that choice is very dangerous -- you're betting the success of your company on something that has a better than 50-50 chance of failing.

If you work at a web or mobile company creating APIs or an app store, the news is equally disturbing: The odds are that you won't succeed.

So it's very important to look at the history of those failed platforms, to figure out what goes wrong and how to avoid it. When you do that, the answer is pretty clear:


It's the ecosystem, stupid

The success of a developer program is not driven just by the beauty of the APIs or the store, but by how the overall ecosystem works to enable developers to prosper. The two parts of the ecosystem that are most important to developers are the ability to create something cool, and the ability to make money. Coolness gets developers to try your platform in the first place. Most developers, especially the innovative new ones, gravitate to a platform that lets them easily create something cool that will impress their friends. But as those developers get older and more responsible, they eventually get tired of drinking lemon drops with Mark Cuban (link). They need to pay rent, buy food, and do other things that require money. If they can't make money from a platform, they will move away to the next one. So the financials are what makes developers stick around over time.

If the ecosystem breaks down anywhere in the chain, the developer community will eventually collapse. You can see this in process driving the history of some prominent web and mobile platforms:

Facebook. Earlier I said Facebook apps were a success because they helped the company grow. That's definitely true from Facebook's short-term perspective, but if you talk to Facebook developers the story is much more mixed. Some people online say there are lots of ways to monetize Facebook apps (link), but other reports say it's difficult to actually make the revenue come in (link). The online attitude toward this when Facebook's platform launched in 2007 was pretty dismissive. One commentator wrote (link):

The problem of not making money with your app is not a Facebook problem. It's your problem!

That's the right attitude for a developer to take: Control your own destiny. But monetization becomes a Facebook problem if nobody can make money. Developers poured into the Facebook platform like the tide in the Bay of Fundy, but a lot of them couldn't make money and promptly poured back out. I can tell you from personal experience that some are pretty bitter and unlikely to do anything with Facebook again.

Mobile Java's problem was that it's not a real platform. Handset vendors and operators were allowed to break compatibility between their implementations of Java, forcing developers to tweak their java apps almost endlessly, dramatically raising their costs and making it hard to scale their companies. The selling model for Java apps was also seriously broken -- to get prominent placement on a phone, developers often had to cut special deals with carriers. Some of the most successful mobile Java game developers have survived because they're great deal-makers; they figure out how to develop for a big brand that wants to create a mobile presence, or they hook into the promotion of a movie. This business model favors a few companies with the skill and contacts to cut the deals; the current mobile Java world is not an ecosystem that can support huge numbers of developers.

Palm and Windows Mobile both succeeded at first in enabling developers to create a lot of interesting applications. Although both operating systems had technical flaws, they were reasonably open to any developer, and the "write once run anywhere" idea mostly worked. Unfortunately, the marketing and sales model for those applications started out mediocre and got worse over time. There was no software store on device, so users had to go out on the web to find apps. This cut the number of people looking for applications. Those who did look online usually landed in the mobile application stores, which over time took a larger and larger share of the developer's revenue. Eventually, the stores' cut grew to more than 50% of revenue, making development uneconomical for many companies. When sales of Palm OS and Windows Mobile devices failed to grow rapidly, the financial model for many developers fell apart, and the ecosystems faded.


What to look for in an ecosystem

If you're a developer looking to find a viable ecosystem, or a platform vendor looking to build one, here are the things to look for.

How easy is it for developers to create something cool? How powerful are the APIs? Can the platform be programmed using standard development tools? Eclipse seems to be the preferred platform among much of the web app crowd, and it's free.

Is the platform programmed in a language that's obscure or difficult to use? This has long been one of the big barriers to Symbian native app development.

How do applications get visibility? Is the store displayed at the first level of the smartphone? How easy is it for users to navigate the store? Online stores like Handango are notoriously hard to navigate; the user experience is about like walking through a flea market.

Can good apps rise to the top? In some software stores, the developer has to pay for prominent placement on the store. This is incredibly corrosive to the ecosystem. The big software companies with money to pay for placement are often the least innovative. So users see an app prominently featured, try it, are disappointed, and never try another one. If web search worked this way, there's a good chance that the web as we know it would never have developed. The practice of pay for placement is a self-defeating, regressive tax -- it penalizes most the small developers who are most likely to create compelling new apps that make a platform more successful.

Ideally, placement on the store should be based on independent user reviews, so the best new apps can rise to the top naturally.

What are the terms of business? Can a developer bill for an app through the user's phone bill? Forcing people to input their credit cards separately slows adoption of software. Can the developer choose different forms of payment? Developers should be enabled to experiment with freeware and subscription payment systems, just as they do on the web. How much of the developer's revenue does the store keep? The ideal cut is no more than 20%.

Are there restrictions on the application's functionality? This is a sore point for iPhone developers. Apple won't allow intermediate platforms that run other applications. So no Java, no Flash, and no emulators like StyleTap's Palm OS emulator (link). This also inhibits other developers who want to expose APIs within their applications.

What is the overhead for security? Some platforms require applications to pay for a new security certificate every time the app is revised. The cost is typically a few hundred dollars, which doesn't sound like much to a big operator or OS company, but is a huge burden to a small company with several apps. They're basically punished every time they fix a bug, which is very unwise -- you want developers to fix bugs instantly, because that increases user satisfaction and reduces support calls. Basic security certificates can and should be issued automatically by the software store, at no charge.

How big is the user base? This will be a more and more important issue over time. For a developer, the ideal platform would let them sell to the whole base of mobile phone users, not just one brand or model.


Room for improvement

Based on those tests, no mobile platform offers an ideal ecosystem today. Apple probably comes closest at the moment. Here's how I'd grade it:

--Power: A-. The iPhone APIs give developers a huge amount of power, and there was a lot of delighted commentary on the web when the APIs were first revealed. But there is a learning curve for iPhone development; Apple has its own tools and its own variant version of C. And support for some typical OS features (such as cut and paste) is missing.

--Store: A-. The store is built into the device prominently, so apps are easier to discover. And there is a user-driven rating system. Developers can bill through Apple's iTunes system; not as convenient as billing through the carrier, but not bad. Apple takes 30% of revenue, which is not ideal, but is better than the 50% or more cut that burdens mobile app developers elsewhere.

--Terms: C+. There are significant, ambiguous restrictions on what a developer can do on the iPhone. The most onerous terms restrict the ability of developers to add functionality to applications and create software that run other applications. The terms cause a lot of confusion among developers; I'm on a mailing list for iPhone developers where they have been trying to figure out whether they can download content to an iPhone app. The answer: it's unclear as to whether content is a form of functionality, and you should ask Apple's lawyers. That is an incredibly intimidating message to app developers. It feels far too much like doing business with the operators.

--User base: Incomplete. It's relatively straightforward to make money from iPhone apps today because the number of developers is still relatively low. But over time, I think it's unlikely that Apple will be able to grow its user base at the same rate as the developer base is growing. If that happens, life will get much less pleasant for iPhone developers.

The ideal mobile app ecosystem would have the API power of the iPhone and the discovery experience of the iPhone store, coupled with business terms that allow add-on APIs like Flash, Java and Google Gears, all working across a much larger base of devices.


What it all means

If you're a software developer and some platform vendor or web company comes around evangelizing their software store or their APIs, you should evaluate the overall ecosystem they're providing, not just the store or APIs alone. If they haven't thought through issues like billing and discovery, it's a big warning sign.

If you work for a platform or web app company that wants to create a developer community, you need to plan the whole ecosystem and make sure it'll all work. This is especially important for a mobile company that wants to compete with the iPhone store. The way to fight iPhone for developers is to create a superior ecosystem. Apple's weak point is the business and technical restrictions on its developers, and the limited reach of the iPhone APIs. If another vendor -- say, Nokia or Google or Microsoft -- can pair a great store and powerful development with more openness and broader reach, they might be able to give Apple some serious competition. Elia Freedman had some good suggestions on ways to start (link).

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PS: Thanks to MobHappy for including my post on smartphone share in the Carnival of the Mobilists (link).

Palm OS on Nokia: Strategy or tactic?

I was stunned today when I saw the press release from Access Company saying that they're giving away a beta version of the Garnet emulator for Nokia's N-series Linux tablets (link).

The Garnet emulator lets you to run most Palm OS applications. So in layman's terms, Access is giving away Palm OS for use on any N-series tablet.

I hadn't previously heard any hints from Access about offering Garnet for other platforms. I thought it was only supposed to be available with Access Linux.

I got excited by the announcement, figuring maybe Access had realized that the real innovation is going to come in the applications layer, not the core OS plumbing. I imagined all sorts of scenarios for what they might be planning:

--How about porting Garnet to some other Linux implementations. Hmm, what comes to mind? Maybe Google's Android? Access would need cooperation from Google in order for the emulator to talk directly to Linux. Would Google help with that?

--There is a need in the market for a mobile application environment that's truly "write once, run anywhere." Might Access intend to use Garnet to compete with Java? That would involve porting Garnet to operating systems other than Linux. How about Windows Mobile and Symbian? How about the iPhone?

--There are several ways Access could make money from this:

• Give away the emulator in beta but charge for the final version.
• Give away the emulator on N-series but charge for it on other platforms.
• Give away the emulator everywhere and make money by selling support software and bundling a software store and taking a cut of the purchase fees for apps (a derivative of the iMode and Acrobat models).

Intrigued by the possibilities, I talked to folks at Access. They shot down most of my speculation. As it was explained to me, this is a tactical move. By porting Garnet to the Nokia tablets they can get some testing for the emulator, and also give a "more interesting ongoing proposition for current developers." (It says something about the momentum for your OS when you feel the installed base of Nokia Linux tablets is an attractive developer target, but I guess you take what you can get.)

Access might try to put the emulator on other standard Linux implementations, but they're very busy working on software for licensees they can't talk about yet, and don't have time to port to anything else, including Android.

That's a shame. In my opinion, there's more of a market for Garnet on other platforms than there is for a Linux phone OS now that Google is giving one away.

But Access believes Google's nonstandard approach to Java and Linux is not going to go down well with the mobile development community. They said Android faces big challenges and a likely backlash.

Okay. I guess only time will tell whether that's justified self-confidence or denial of reality.

Meanwhile, I'll go play with Garnet on my Nokia tablet and wonder about what might have been.

Google, the OS company

The bottom line: Google is now an OS company.

The fact that Google's recently-announced OS products are aimed at mobile devices and social networking sites is interesting, and I'll talk about the impact of that below. But it's secondary. I think the big, really important change is that Google has now jumped with both feet into the middle of the operating system world. That potentially has huge implications for the industry.

The impact will depend a lot on how Google follows up. If it pours substantial energy and resources into its OS offerings, it will be extremely bad news for Microsoft and other companies trying to charge money for their own platforms. On the other hand, if Google doesn't make a serious long-term commitment, it will embarrass itself deeply. This isn't like launching a new web application -- an OS has to be complete, and it has to work properly in version 1, or there won't be a version 2.


What they announced

It's kind of ironic. For years after Google became a prominent web company, people speculated about whether or when it would create its own OS. The logic was that Microsoft has its own OS, and Google was challenging Microsoft, so Google would create its own OS too. But then as the years went by and it didn't happen, people moved on to other subjects. The speculation died out. But one of my rules about the tech industry is that "obvious" things happen only after everyone in the industry has written them off. So I guess Google was due.

The company has been creeping toward the OS space for a while. Google Gadgets is an API to create small applications that run in web pages, and Google Gears is code that lets web apps run offline, making it easier for them to challenge desktop applications. But they were both relatively low-profile (or as low profile as anything Google ever does). But in the last couple of weeks, Google made two much more assertive announcements:

--OpenSocial is an effort to create a shared platform for applications that can be embedded within social websites (link).

--The Open Handset Alliance is an effort to create a shared platform powering mobile devices (link).

Although they're aimed at very different parts of the industry, they're both efforts to create a standard platform where there was fragmentation; and they're both alliances of numerous companies, with Google providing most of the code and the marketing glue. I think there's a recurring theme here.


Details on the Open Handset Alliance

Open Social was covered very heavily when it was announced a couple of weeks ago, so I won't recap it all here. If you want more details, Marc Andreessen did an enthusiastic commentary about it on his weblog (link).

The OHA announcement was today, and I want to call out some highlights:

--It's built around a Linux implementation called Android. Android will be free of charge and open source, licensed under terms that allow companies to use it in products without contributing back any of their own code to the public. This will probably annoy a lot of open source fans, but it's important for adoption of the OS, as many companies thinking about working with Linux worry that they will accidentally obligate themselves to give away their own source code.

--Google is creating a suite of applications that will be bundled with Android, but they can be replaced freely by companies that want to bundle other apps, according to Michael Gartenberg (link). There is a lot of speculation, though, that if you bundle the Google apps you'll get a subsidy from Google. The folks over at Skydeck estimate the subsidy could be about $50 per device (link). That might not sound like huge money to you and me, but keep in mind that mobile phone companies routinely turn backflips to squeeze 25 cents out of the cost of a phone. When you sell millions of phones a year, it adds up.

--A huge list of companies participated in the announcement. That's not as impressive as it sounds; when you have a well-known brand, a lot of companies will do a joint press release with you just for the publicity value. But a few stood out:

Hardware vendors. Samsung, Motorola, LG, and HTC all endorsed the OS. HTC and LG gave particularly enthusiastic quotes. The first three companies have all been playing with Linux for some time, so I wasn't surprised. But HTC is another matter -- it is the most innovative Windows Mobile licensee, and Microsoft must be very disturbed to see it blowing kisses at Google.

(A side comment on Motorola: For a company that said it wanted to consolidate down on a small number of platforms, Motorola is behaving strangely -- it jumped all over Symbian a couple of weeks ago, and now is supporting Android as well. I think it has now endorsed more mobile operating systems than any other handset vendor.)

Operators. Participants in the announcement included NTT DoCoMo (a long-time Linux lover), KDDI, China Mobile, T-Mobile, Telecom Italia, Telefonica, and Sprint. That's a very nice geographic spread, and ensures enough operator interest to make the handset vendors invest.

--Google claims all Android applications will have the same level of access to data on the phone. That's pretty interesting -- most smartphone platforms have been moving toward a multiple-level approach in which you need more rigorous security certification in order to access some features of the phone. I'll be interested to see how the security model on Android works.

--We'll get technical information on the OS November 12, and the first phones based on Android should ship in the second half of 2008.

--Although Android's first focus is mobile phones, the New York Times reports that it can be used in other consumer devices as well (link).


What it means to the mobile industry

It all depends on the quality of Google's work and the depth of its commitment. If Android has technical or performance problems, it could sink like a stone. If it doesn't have enough drivers or has poor technical support, the handset vendors will avoid it. If the developers can't create good applications, users won't want it. This is a very different business for Google -- handset vendors and operators will not tolerate the sloppy, indifferent technical support that Google provides for its consumer web apps.

If, on the other hand, Google's platform really works and the company invests in it, I think it could have some very important impacts.

Impact on Windows Mobile: Ugliness. The handset companies endorsing Android are also Microsoft's most prominent mobile licensees. I doubt any of them are planning to completely abandon Microsoft (they don't want to be captive to any single OS vendor), but any effort they put into Android is effort that doesn't go into Windows Mobile. So this is ominous.

The whole mobile thing just hasn't worked out the way Microsoft planned. First it couldn't get the big handset brands to license its software, so it focused on signing phone clone vendors in Asia, thinking it could use them to pull down the big guys. But Nokia and the other big brands used their volume and manufacturing skill to beat the daylights out of the small cloners.

Now Google is coming after the market with an OS that's completely free, and may even be subsidized. This will put huge financial pressure on not just Windows Mobile, but all of Windows CE. Even if Microsoft can hold share, its prospects of ever making good money in the sub-PC space look increasingly remote.

Impact on Access: Ugly ugliness. How do you sell your own version of Linux when the world's biggest Internet company is giving one away? I don't know.

Impact on Symbian: Hard to judge. Symbian is the preferred OS of Nokia. As long as Nokia continues to use Symbian, it stays in business. The question is how much it'll grow. After years of painful effort, Symbian just managed to get increased endorsements from Motorola and Samsung. Now Google is messing with both of them. Japan has been a very important growth market for Symbian, now Android is endorsed by both DoCoMo and KDDI. All of that must feel very uncomfortable. If nothing else, it's likely to produce pressure on Symbian to lower its prices. And Symbian should be asking what happens if Android turns out to be everything Google promises -- a free OS that lets handset vendors create great phones easily. It's not fun competing against a free product that's been subsidized by one of the richest companies in the world (just ask Netscape).

Maybe if Symbian agrees to enable Google services on its platform it can get the same subsidies as Android does. It's worth asking. If not, maybe Symbian should be looking for other places where it can add value in the mobile ecosystem.

Impact on mobile developers: Potentially great. Mobile developers have suffered terribly from two things: They have to work through operators to get their applications to market, and they have to rewrite their applications dozens of times for different phones. If Android produces a single consistent Java environment for mobile applications, that would be a big win. And if it can open up the distribution channels for mobile apps, that would be great as well. We don't have enough details to judge either outcome yet, and the app distribution one depends on business arrangements that may be outside Google's control.

Impact on Apple, RIM, and Palm: Probably none at all. A lot of the coverage of Android is positioning it as some sort of challenger to iPhone and RIM.

I don't buy it.

Apple, RIM, and Palm all make integrated systems in which the software and hardware are coordinated together to solve a user problem. Android, by contrast, is only an operating system. It's plumbing, not the whole house. Unless Google's handset licensees magically develop the ability to design for users -- a feat equivalent to a giraffe sprouting wings -- their products won't be any better as systems solutions than they are today. The OS hasn't been the thing holding them back, and changing OS won't alter the situation.

Android puts interesting financial pressure on Microsoft, but it doesn't directly solve any compelling user problems. If it eventually drives a great base of mobile applications, that might eventually be attractive to some users. But in that case the systems vendors could just add a copy of Google's application runtime (it's open source, they can grab it anytime they want). Or they could host their devices on Google's plumbing. Palm and RIM might both benefit if they could transfer engineers away from core OS and toward adding value that's visible to users.


Impact on the tech industry: This isn't just about mobile phones

I have no access to Google's internal thinking, but even if it sincerely believes it's only doing a mobile phone OS, I don't think it can or will stop there. Technology products often develop a momentum of their own, no matter what was intended at the start. The lines between the computing and mobile worlds are breaking down already, and if Google creates an attractive software platform that's free of charge, that platform will inevitably get sucked into other types of devices. I'm not saying that Android is going to end up in PCs, but if it's functional and well supported I think it could end up running on just about everything else that has a screen.

Besides, if you look across all of the recent Google announcements, I think it's clear that Google has a larger agenda: It wants to break down walled gardens, because they interfere with Google's ability to deliver its services. It has even developed a standard methodology for attacking them: Create a consortium so you don't look like a bully, and fund an "open" alternative to whatever is in the way. They are doing it to Facebook, and they're doing it to Windows Mobile. Google doesn't even have to make money from the consortium, as long as it clears the ground for its services to grow.

Take a lesson from evolutionary history. The most successful animals are not those that adapt to the environment; they are the ones that reshape the environment to match their needs. I think that's what Google is doing. It's going to use open source and alliances to suck the profitability out of anybody who creates a proprietary island that it can't target.

It'll be interesting to see if and how Google applies this principle to the upcoming frequency auction in the US.

Or to anyone else who gets in its way.

Foleo, we hardly knew ye

A quick note on Palm's decision to cancel the Foleo. To me, the most surprising part of the announcement was Palm's explanation that it couldn't afford to create two different software platforms (link).

To translate that from Silicon Valley speak, Palm was building two substantially different versions of Linux, one for future Treos and one for the Foleo. That was a huge surprise to me -- I had assumed the company was doing a single version of Linux for both product lines. The overhead cost associated with maintaining multiple platforms is enormous. Even huge companies struggle with it, so in my opinion there's no way in the universe that Palm was going to be able to afford it.

So it turns out the Foleo was almost doomed from the start. Unless it was a raging success from day one, it wasn't going to be sustainable economically. When the Foleo announcement failed to set the world on fire, the end was probably inevitable.

Good deal: Palm's new ownership

Several people have asked what I thought of the recent change in ownership at Palm. I don't have any inside information, so all I can do is speculate like everyone else, and try to apply the lessons I've learned from working at other companies.

Overall, I'm very happy for the folks at Palm, and cautiously hopeful about what this might mean for the company's prospects. I think this outcome is a lot more encouraging than any of the buyout rumors that were floated in the last few months. Palm's new part-owners clearly understand the value of systems design, which is Palm's biggest potential advantage in the market. I think we really need another great systems company to challenge Apple, and I would love to see Palm step up to that task.

Although a purchase by a Motorola or Nokia would have been very entertaining from a soap opera perspective, they don't really understand systems design, and it's very likely that they would have digested Palm without a trace. I'm reminded of a joke we used to tell at Apple in the 1990s when there were rumors that IBM would buy the company:

Q: "What do you get when you combine Apple and IBM?"
A: "IBM."

The other buyout option what was circulating, a full purchase by private capital, would have left the company independent, but with a load of debt that might have been crippling. Hardware companies must have a big reserve of cash to fund inventory and tide them over if they launch an unsuccessful product. I don't pretend to understand all the terms of the Elevation deal (they're wickedly complex), but from my perspective it looks like the financials aren't crippling. I am a little worried about Palm's cash levels, though; a lot of their current cash is going into the stockholder payout.

A couple of other thoughts on the impact of the deal:

Bye-bye 3Com. Palm gets three very well respected people for its board, and removes Eric Benhamou, the last vestige of the 3Com legacy. Somewhere I have a photo of the Palm and PalmSource combined management teams from just before the two companies were separated. The photo includes everyone in the company from Mr. Benhamou down to senior directors. That was about 30+ people. Every single one of them is now gone. So if you didn't like Palm's management back then, you should take another look at the company because it's now 100% different.

Irresponsible speculation about politics. After a change like this, the standard sport in Silicon Valley is to speculate about what it means for the job status of the people involved. In that vein, the thing to ask is, "Who's running Palm in the long run?" The weirdest part of the whole Elevation deal is the arrival of Jon Rubinstein as both Chairman of the Board of Palm and head of product development. As Chairman, Jon is technically the boss of Palm CEO Ed Colligan. As head of product development, Jon technically reports to Ed. So Jon is kind of his own second-level manager.

That feels...unstable.

Palm seems to now have a surplus of product leaders. Jon is in charge of product development, Jeff Hawkins is the designated product visionary, and marketing SVP Brodie Keast is supposed to control the product road map, according to the press release Palm issued when he was hired. It's hard to picture a car with three steering wheels. Who will really be in charge? In the conference call Palm said that Jon would be the execution guy and Jeff the visionary. "The combination of those two guys is one of the most dynamic... combinations on the planet." Maybe. Any organization structure can work if the people involved get along well, and I presume they would not have made this arrangement unless they were all comfortable they could work together. So good for them and best wishes.

But if you want to be a cynic, you'd speculate that Jon probably didn't leave Apple just to be the head of engineering execution at a much smaller company. You wonder if the current situation is just a stage in a longer-term changing of the guards at Palm. I don't have any evidence that's the case, and I am not trying to start any rumors. But when you see a nonstandard reporting structure like this, it usually triggers speculation that another shoe is going to drop later.

Only time will tell.

What's the effect on products? That's the most important question, and it's impossible to answer at this time. Hardware product development usually takes 18-24 months, so the earliest Jon could change the Palm road map would be very late 2008. But that's the middle of the Christmas selling season, and you can't announce products then. So realistically, the Rubinstein product era doesn't start until spring 2009.

In the meantime, there's a lot he can do to make the development of the currently-planned products be more efficient and predictable. Palm has said publicly on numerous occasions that its on-time product delivery needs to improve, and presumably Jon can help with that.

But personally, I think Palm's bigger problem has been its lack of innovative new product designs. Unless Palm has a bunch of surprise products already in development, it will take quite a while to turn around the product road map.

_____________________

Thanks to Twofones for including last week's post on the Palm Foleo in the latest Carnival of the Mobilists (link).

Palm Foleo: It's a PC, dummy

Wow, what an interesting day this was in the mobile and web world:

--Apple hinted that it will allow third party developers to add applications to the iPhone, potentially overcoming one of the device's biggest shortcomings (link).

--Google announced Gears, an open source project to enable web apps to work offline -- injecting Google into the growing effort to make PC operating systems irrelevant, and linking Google with Adobe (link).

--Livescribe previewed its pen computing device, the latest in a long series of efforts to turn Anoto's pen sensing technology into a commercially viable product (Livescribe link, Anoto background).

And oh yeah, Palm finally announced Jeff Hawkins' secret project, the Foleo.

A lot of the online commentary on the Foleo hasn't been enthusiastic. Engadget called it the "Foolio" (link). Ars Technica's article was headlined, "Palm officially out of ideas, debuts 1990s palmtop concept" (link). The discussion on the Palm Entrepreneurs Forum (an e-mail list for Palm application developers) was more balanced between admirers and detractors, but even there a lot of people were very lukewarm.

I think a lot of this is Palm's fault. They're trying to position the Foleo as a "mobile companion,"* a device that smartphone users can carry with them when they need a keyboard and bigger screen. In other words, it's for a small subset of the smartphone market, which itself is a small subset of the phone market. A niche inside a niche. The Stowaway keyboard folks should worry.

But I don't think the Foleo really is a "mobile companion." Back when I started to work at Palm (before the turn of the century) one of the old veterans of the company pulled me aside and passed along a little wisdom. "Michael," he told me, "Ya gotta think in terms of real estate. If you're in another device's real estate, you're competing with that device. Palm lives in your pocket; it competes with other things that go in your pocket. If you get bigger than the pocket, you're living in the briefcase, and you're competing with the notebook computer."

Foleo lives in the briefcase. It's displacing the notebook computer from your bag. I don't care what they call it, I don't care if Palm fully realizes it yet, but the fact is that Foleo's a notebook computer.

More to the point, Foleo is the most significant new consumer PC platform introduced in the US since the Macintosh. All you Linux heads who have been asking for a true consumer Linux PC, you finally got your wish.

Wow. That's kind of cool. It may be crazy, but it's a craziness I like. Palm has reimagined the PC for the wireless Internet era, simplifying and stripping away everything they thought was no longer necessary. So since most people carry a phone, you use the phone as your wireless modem. The device also has no hard drive. Since everything is stored in flash RAM, you never actually shut it down -- you just turn off the power, and when you turn it on again all your data and apps are still there, waiting for you. This is normal in a handheld, but it's long overdue in a PC.

"Desktops and laptops were too large, expensive, complex. You're not going to build billions of these complex machines, you build mobile computers....But it became clear the smartphone wasn't going to fill that role....You need a full size screen and keyboard." --Jeff Hawkins, quoted in Engadget

How well will the Foleo sell?

I don't know. It's not the product I would have built (my long wait for an info pad continues). The most successful mobile devices in the last decade have been specialized products that solve one problem for one type of customer -- iPod plays music for entertainment hounds, GameBoy plays games, BlackBerry does e-mail, Palm Pilot does your calendar, etc. The Foleo flies in the face of that. Although Palm talked a lot about e-mail today, the device also has a browser built in, and clearly has ambitions to be a general-purpose computer. I think we should judge Foleo on those terms, not by measuring it against other products we all imagined or wanted. Here are a couple of quick thoughts, and I'll probably post more in a few days after I've had more time to think about it...

Palm can now succeed even if Treo fails. Palm implied that the Foleo will be able to work with any smartphone, not just the Treo. This potentially gives Palm a larger market, and also sidesteps the operators, since Foleo can be sold through consumer electronics stores. Palm execs have been very public in saying that they are happier selling through retail rather than through operators, so today they must feel a little bit liberated.

Beware the Windows CE factor. I have seen many products very similar to Foleo fail over the years, and that worries me a lot. For years Microsoft and the Windows CE hardware companies produced a series of sub-notebooks that looked eerily like the Foleo. Like Foleo, you were supposed to use them to do light browsing and e-mail. They all died quickly, mostly because they looked so much like Windows that people expected them to run Windows apps. When people didn't get the full Windows experience, there was an immediate backlash.

Foleo's a little different because it doesn't pretend to be any flavor of Windows. But the hardware design looks an awful lot like a Windows PC, and that's going to create the wrong impression. Maybe Foleo looks nicer in person, but in the photos it looks like an anonymous gray box, disturbingly like a Dell subnotebook. It doesn't seem to have the lust-inducing look of the Treo 600, let alone the Palm V. I wish they'd made the case more distinctive, or at least a different color, because then people might expect different things from it.

Success probably depends on the apps. Like other PCs, Foleo doesn't do all that much out of the box. It apparently comes with Documents to Go (a well respected suite of Office apps, ported from Palm OS), an e-mail client, and a browser. That's all nice, but it's definitely not enough to make me put down my notebook computer. I think Foleo will eventually live or die based on whether it attracts a lot of third party applications that do interesting things you can't do with a notebook PC.

Palm has been evangelizing a number of developers to create apps for Foleo, but for some strange reason it excluded them from the Foleo announcement today. Instead, the announcements are going to be dribbled out one by one over the next few weeks and months. I presume the idea was that they'd create a sense of momentum, but I think instead what Palm did is make today's announcement less impactful than it could have been.

That means we haven't heard the full Foleo announcement yet. There's more to come from the third parties. We won't be able to really judge the device until we see the totality of what it'll do at launch.

My bottom line, based on what I know today: As a standalone mobile data device, the Foleo is uninspiring. As a potential challenger to the notebook PC, I want to believe, but the proof will be in the third party apps.

_______________

*By the way, the term "mobile companion" is perilously close to "PC Companion," one of Microsoft's early terms for Windows CE devices. The phrase gives me hives, but I think that's just me.

Carnival of the Mobilists #70: Is RIM stupid or lying?

Welcome to the 70th weekly Carnival of the Mobilists. If you're not familiar with the Carnival, it's a collection of mobile-related commentary from the last week, nominated by the weblog authors themselves. The hosting duties rotate from week to week.

This week's articles cover a huge range of subjects, from game-playing cameras to RIM's service outage. I tried to come up with some clever theme to link them all together, but I think the main message is that the mobile market is so diverse that there are no common themes.

And away we go...

RIM's service outage: Are they liars, or just incompetent? Wow. The Mobile Enterprise Weblog gives a scathing analysis of RIM's recent service failure, and concludes:

"Either RIM's NOC is managed by idiots OR RIM's PR department is incompetent OR none of the above."

(With 'none of the above' meaning the company had a more serious failure and is trying to cover it up.) I have no idea what really happened, but this commentary is what occurs online when you try to play down a story. It's far better to be completely open about a problem. Then at least people may trust you in the future rather than assuming you're lying.

MVNOs: Victory of the bottom-feeders? Jason Devitt at Skydeck, a mysterious new mobile startup, contributes a very interesting post on the fate of MVNOs. He argues that the high-profile MVNOs targeting lucrative customers are doomed, and that the ones to watch are those targeting low-end customers.

How to improve feature phones. Little Springs Design reviews some of the flaws of today's feature phones, and makes suggestions on what needs to be changed.

American business executives should all use SMS instead of e-mail. That's the message from Tomi Ahonen's fervent (and very detailed) essay on the benefits of SMS messaging, and its ubiquity outside the US.

The dumbest convergence product of all time (in my opinion). Pocket Gamer brings us news of a new digital camera that comes with twenty video games built in. They treated the product with very polite respect, but I can't restrain myself: I thought I had seen dumb convergence products before, but this one's the new champion.

Using SMS to communicate to students. Mopocket editorializes that universities should use text messaging to communicate with students in emergencies.

The rebirth of Web Clipping? Well, sort of. Web clipping was a technique Palm used several years ago in an effort to overcome the latency problem with accessing web content on mobile devices. David Beers predicts that Palm's going to use something similar in the future.

Anger over mobile data charges. Helen Keegan editorializes on the charges for mobile data in the UK, and she's not happy.

Enthusiasm for Nokia's web tablet. b-trends brings us a very enthusiastic review of the Nokia n800 Internet tablet device. They tested a nice range of websites, and there are good screen shots.

Checking out a new operator in Spain. WAP Review gives a hands-on review of the Spanish operator Yoigo.

The future of mobile advertising. Always-on Real Time Access summarizes a recent panel on mobile advertising.

Future barcodes. The Pondering Primate speculates about possible future competition between Microsoft and Google in barcodes.

Mobile phone myths corrected. Shackkdiesel tackles some interesting myths about mobile phones.

Which devices to target in enterprise? Mobbu talks about the process for choosing which devices to target when creating an enterprise mobile application. It's not always best to pick the most advanced device.

Bloggus interruptus. My submission for this week is a short commentary on trying to use the mobile Internet while riding on a train.

A robot to load the dishwasher. SharpBrains contributes a summary of the recent Stanford Media X conference, a technology conference featuring Stanford researchers and others. Most of the content wasn't mobile-related, but it makes interesting reading anyway. Check out the robot that can load a dishwasher.


Post of the week. Each week's host traditionally picks a favorite post, and mine this week is Mobile Enterprise's rant on RIM's service outage. It's not the longest post of the week, but the analysis made sense to me, and I always enjoy a weblog post with a bit of passion to it.

So it goes. Next week's Carnival will be at the Silicon Valley Himalayan Expedition. Anyone with a weblog can submit a post to the Carnival. You can use the new online submission form here.