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Palm Column

Big changes for the little Palm

by Shawn Barnett
October 1999, issue 30

These last two months have been very active for the Palm OS. We're starting to see the results of decisions and announcements made months ago: everything from new products to spinoffs and price reductions. The market for small handheld computers has expanded tremendously, and Palm is still sitting on top of it. They're so dominant in the marketplace, the only thing Palm Computing has to worry about competing with itself.

Indeed, retailers report that there's little competition from Windows CE products, despite their color screens and faster clock speeds; the Palms outsell them ten to one. The only problem retailers have when selling handhelds is helping customers decide which Palm they want. The variety is becoming a bit staggering: Palm III, Palm IIIx, Palm IIIe, Palm V, Palm VII, and there are two more that will be announced by the time this issue comes out: the Palm Vx, with 8MB of RAM and a faster IrDA port (115Kbps instead of 56.6), and the Palm IIIe SE with its clear case and available color covers, now available for everyone (not just students anymore)-but only from one national retailer, name not available at press time.

But now there's a new competitor: Handspring has come out with the new Visor handheld computer, based on the Palm OS (see review on page 68). The new computer, made by the creators of the original Pilot, opens new possibilities for handheld computing and communication with the inclusion of the Springboard expansion slot. With one of the first modules to be available, Springboard enables the Palm to be somewhat independent of the desktop. Most programs will still need to be loaded from the desktop, but the backup module will allow users to go on the road without worrying about their batteries running out, because the lightweight flash backup card has all their data.

Prices for the Visor are also lower than any of the other Palm computers, starting at US$50 less than even the cheapest Palm computer, which does indeed threaten to undermine Palm's dominance. The lack of a Springboard slot, combined with higher prices will make the Palm line less attractive to the savvy PDA buyer, if Handspring is able to get supply up quickly enough. As a startup operation, Handspring may be surprised by the demand for the latest thing from the mind of Jeff Hawkins. As it is, while advance orders are being taken, units will not be available until mid to late October.

Price reductions
Doubtless it was with Handspring's lower prices in mind that Palm is lowering their prices across the board. The Palm IIIe will be dropping from US$229 to US$199, the IIIx goes from its debut price of US$369 to US$299, and the Palm V goes from US$449 to US$399. The latter reduction is to make room for the Palm Vx, which will take the near lead as the highest priced Palm at US$449. I say "near lead" because there is one more price reduction to report: the Palm VII will be going from US$599 to US$499 as it finally goes on sale nationwide.

Palm is also announcing a new price tier for the service. Called the Volume Plan, it includes 300K of data for US$39.99 a month. The other plans remain the same, except that the setup fee goes from US$19.99 to US$9.99, and the per-KB charge goes from US$0.30 to US$0.20. Those who sign up for the Volume Plan between October 4 and January 4 of 2000 will get 1000KB per month for the first six months of service. They're following the cellular model, and that's a good thing. I still think they need to make it cheaper, but this is a step in the right direction.

Coming as no coincidence the day before Handspring's Visor announcement, 3Com's CEO Eric Benhamou announced that Palm Computing would be spun off from 3Com. It came as no surprise, at least not to industry watchers who've been circulating rumors for months that 3Com and Palm were a mismatch, and that there were suitors surrounding 3Com who didn't like how Palm fit into the company.

I believe it may have surprised Hawkins and Dubinsky though, who left 3Com to form their own company last November with positive words on their lips about how nice it would be to work for a startup company again. It sounded to me like they weren't enjoying the bureaucracy of 3Com too much, and wanted to make some of their own decisions about the product they'd created. When they initially sold Palm Computing to US Robotics, a strong and forward-thinking company, I'm sure they had no idea 3Com would quickly come in and gobble them both up like some famous sports stadium.

The San Jose Mercury News reported on September 14 that Hawkins and Dubinsky, Palm and Handspring's original founders, "took a handful of key staff with them to their new venture. But both said they talked extensively to 3Com about selling off Palm before deciding to leave. 'If they had spun us out, I'd still be there,' said Hawkins."

It's a scandal, if you ask me. I doubt there was sinister intent on 3Com's part, but depriving a company of its brainpower and then spinning it off is just not clear thinking. The clumsiness displayed in such a move makes me wonder about 3Com's future.

The good news is that Palm won't be a part of 3Com's future. In a stroke of good luck, reasoning in his simple and slow mind, the giant has set them free, and Palm can grow and innovate as the market requires. If we're really lucky, perhaps in six to eight months, Palm and Handspring will do a little merger of their own.

Shawn Barnett can be reached via e-mail at

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