[NTLK] Marketwatch mentions the Newton

Folks

Another mention in this article below.

Hope you find it interesting.

Warm regards

Tony Kan

Christchurch
New Zealand

Palm's true test is the next 10 years
Commentary: This time, it's about luck, smarts, and style

By Bambi Francisco, MarketWatch
Last Update: 7:53 PM ET Mar 23, 2006
SAN FRANCISCO (MarketWatch) -- In 1998, I bought my father a Palm for
Christmas. I thought I'd help my dad graduate from his address book, which
at the time, was a couple sheets of paper.

My father -- who couldn't bear changing his ways -- re-gifted that Palm
(PALM)back to me, which I'm grateful for since, from that time on, I've been
a user of Palm devices, throughout their many iterations.

And, there have been many generations of the product since January 1992 when
Jeff Hawkins, joined shortly thereafter by Donna Dubinsky, started Palm
Computing.

Palm's first product -- Pilot 1000 -- which was introduced in March 1996,
was black and white and had 128 kilobits of memory, not even enough to hold
a picture. Ten years later, Palm's latest device -- the Treo -- is smart.
It's a phone; a video camera; it's connected by a wicked fast network that
lets you access your electronic mail and browse the Web faster than dial-up
connections; it has a keyboard for your thumbs. Yep. It's a minicomputer we
hold against our ear so we can snap pictures of our earlobes.

We've come a long way, from the pioneer of mobile computing products, Apple
Computer's (AAPL) Newton, which failed miserably because, well, its
graffiti-handwriting software, however innovative, just didn't work. And, it
never could fit in a purse, let alone a pocket.

Palm secured its place in history by perfecting what Apple had started, and
beating out other major league players, like IBM (IBM), General Magic, and
Hewlett-Packard (HPQ), in the first decade of mobile computing.

What an interesting time it was for Palm. Two acquisitions left it buried
inside 3Com; Palm was spun-off in an IPO; It split into hardware and
software companies; It had a name change from Palm to palmOne back to Palm;
And, it purchased Handspring, a company Palm's original founders started
after busting out of Palm in 1998.

Palm's ability to endure is a testament to this company's will to survive.
But was Palm smart, or just lucky?

Piggybacking

Timing and smarts and knowing a good thing (worth improving upon, like
Apple's Newton) were part of Palm's success.

"I think it [Palm] was all about timing," said Andy Kessler, author,
columnist, and former hedge-fund-manager and Wall Street analyst. "Palm hit
the market when size, screens, battery life and a pen interface all came
together."

As Kessler sees it, Apple -- which introduced the Newton in the early
'90s -- was too early; General Magic stressed communications before it was
ready, and Microsoft (MSFT) tried to unseat Palm, but tried to do it with a
version of Windows. "Palm [on the other hand] caught lightening in a
bottle," he said.

"Palm took Apple's Newton idea and perfected it," echoed Albert Lin, an
analyst at American Technology Research, who's followed Palm since its
birth. "Aside from the elegance of the great technology for handwriting
recognition, the Palm OS was absolutely state of the art in the way it made
technology simple and reliable."

Kessler adds that Palm had one of the first programmable personal digital
assistants, more commonly referred to as a PDA. This enabled technologists
to create a number of features for Palm, keeping it a step ahead of the
personal digital assistants made by Sharp and Casio.

From Palm's perspective, it was about simplicity.

"The other products were cramming capabilities into products," said Page
Murray, vice president of marketing at Palm.

Palm's problems

To be sure, Palm executives made some serious fumbles in the late '90s,
mainly by failing to see how mobile computing was transitioning into network
computing or seamless, connected computing. In other words: A smart phone.

It probably didn't help that Palm was hidden inside 3Com, which in 1997
bought U.S. Robotics, who bought Palm in 1995. Large organizations often
have a way of stifling innovation by creating an over-conservative culture
with competing agendas.

It also didn't help that some of Palm's most talented visionaries, Dubinsky,
Hawkins and Ed Colligan (now Palm CEO), left to set up a rival company,
called Handspring, in 1998.

Palm's troubles only seemed to get worse, despite its road to IPO riches. In
1999, Palm hired Carl Yankowski to be Chief Executive Officer, who
eventually rode Palm through its IPO in 2000. Palm's IPO opened at $145,
closed at $95 for a market valuation of $53.6 billion, according to Lin.

Yankowski resigned in November 2001, after a year in which Palm went from a
company worth $60-plus a share, cash rich and profitable to a money-losing,
inventory-overloaded has-been with a $2 stock.

"Palm hired an incompetent CEO, Carl Yankowski, who cared more for his own
ego than any of his customers," said Lin.

With the departure of Palm's talented founders and a CEO with little vision,
the Canadians who ran Research In Motion (RIMM) managed to get their mobile
idea noticed.

Now there are some four million "Crackberry" addicts who learned to type
with their thumbs on Research In Motion's BlackBerry, which was introduced
in 1999.

The BlackBerry was "the beginning of the end for Palm," said Kessler. "They
[Palm] never could do communications well."

Palm allowed Waterloo, Ontario-based Research In Motion to "steal a market
that should have been Palm's," said Lin.

Yet Palm's story didn't end. To date, nearly 3 million Treos have been sold,
and they account for two-thirds of Palm's sales, according to Murray.

In 2003, Palm incorporated Good Technology's wireless email software into
its Treos, making this smart phone an appealing alternative to the
BlackBerry.

Palm's stylish and personal future

But is Palm taking the right steps to have a bright future over the next
decade?

After all, we're in a different world. It's a world of fashionable smart
phones that aren't only talked about on hip blogs like gizmodo.com, but are
on the covers of Technology Review and Vogue in the same month.

Check out the competition from Nokia's (NOK) E61 to Motorola's (MOT) Moto Q,
and many others.

Now Palm is battling for supremacy with its hardware alone. It let loose its
software division, called PalmSource, and is also using Microsoft's
operating system.

Whether its hardware alone can be enough of a differentiating factor is yet
to be seen.

It's also a world of overwhelming choice, and consumers who demand gadgets
that are practically made to order.

For instance, I'd like a device that's razor thin, light, has a keyboard, is
GPS-enabled, takes high-quality video, and can give me access to my TV at
home so I can be entertained during those long commutes during business
travel. Oh, and did I mention that I'd like it to be a nice shade of
periwinkle?

But mobile computing is hardly a mature industry. There are still many
innovations to come as global positioning systems on devices become widely
distributed. Today, about 10% of all mobile devices around the world are
GPS-enabled, Lin estimates.

Moreover, smart phones are just being launched on the 3-G network for super
fast connectivity that can turn smart phones into mini-television sets. On
Thursday, Sling Media -- which lets people access their home television from
their computers -- just made available software to access your television
from a mobile device that operates on Microsoft's Mobile Pocket PC 5.0
operating system.

So starting today, your Palm Treo 700 can be your TV away from home.

Palm figured out mobility; Research In Motion figured out seamless
connections through email. What's next and who'll figure it out?

Well, along the way to nirvana - a custom-made smart phone - I really don't
know. What I do know, however, is that my dad isn't a total luddite. I
finally found the one electronic gadget he really likes. It's those slim,
business-card-sized digital cameras. For the last three or four years, I've
bought him a new one with better resolution, and every year, he acts utterly
surprised and appreciative.

Now if Palm could just make those cameras smarter, maybe, just maybe my dad
would throw away those sheets of paper too.

Sound off: Who wins the mobile computing future? Go to: Bambi.blogs.com.

You can also receive this column via e-mail. Sign up for Bambi Francisco's
newsletters.

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