Microsoft Corp claims that Palm Computing’s plans to start licensing clones of its market leading Palmpilot shows that the company’s days are numbered. Palm, a division of 3Com Corp, is planning to sign licensing deals later this year, which will allow third party manufacturers to make Palmpilot clones. The deals will be part of a much aggressive licensing push from the PDA manufacturers who expect that eventually over half of the Palm devices produced will be clones. The licensing deals could grab Palm, which is already number one in the market, ahead of Psion Plc and Microsoft Corp CE-based devices, an even greater chunk of the rapidly growing handheld market. Industry analysts expect that by the year 2000, there will be an installed base of more than 14.8 million personal digital assistants (PDAs).
However, Dilip Mistry, Windows CE marketing manager at Microsoft claims that the new licensing push adds up to a confused business model for Palm. This is very akin to the PC model, are Palm a device or operating system manufacturer? he asks. Palm could end up with core products competing with the licensed clones. A Palm spokesperson said that in reply to this that the proliferation of the Palm platfrom was more important than the brand name. Mistry also claimed that Palm did not have the breadth of experience that Microsoft had within the development community – saying that the developer relationship was crucial if an operating system was to be successful. He pointed to what he said was Palm’s lack of large corporate orders as a sign of the immaturity of the OS and said that IT managers would not accept a system that could not link into corporate systems efficiently.
Mistry went on to attack Palm’s reliance on advances in hardware to drive its market. While admitting that the Palmpilot was a great product he said that the software had not kept pace with the platform. For how long are people going to be happy with basic PIM [personal information management] like devices? he questioned. The new version of Windows CE has color support, improved audio and limited MPEG support.
Mistry then turned his guns on Psion Plc and the related Symbian consortium. Psion are definitely losing market share, he opined, claiming that Microsoft had around 28% of the market, Psion 34% and Palm the rest. He claimed that good PR had a lot to do with the buzz about the Symbian consortium. I have yet to see them talk about an end-to-end strategy, he said. He also chided that the deals between Psion, Nokia Oyj and LM Ericsson AB were not exclusive and that Microsoft was working with both of the Scandinavian telecoms companies on CE.
