Updated thoughts on the smartphone market
Earlier, I wrote about why I thought Palm was a winnner. Following that post, there have been some developments in the market. Namely, the announcement of the Motorola Droid mobile device. Since then, Palm’s stock has dropped precipitously and suddenly they are really looking like a distant third player in the market. It looked like they really had a shot at growth, but they didn’t hit the magic formula evidently. Droid is shaping up with a lot of promise to revitalize the Android phone market. I wrote earlier (before the Palm Pre) about how I thought that Andriod could achieve silent ubiquity as more mobile devices ship with the OS installed. However, Android seemed to have been stuck in the unenviable position of being a geek-only favorite, with mainstream smartphone buyers mostly sticking with Apple. Additionally, the HTC hardware was not particularly sexy, especially when compared with similar offerings from Apple.
With the announcement of the Palm Pre, I really thought that we had a strong contender to shake the mobile market up. We had a radical platform design, based on Linux, that consumers would never know about and geeks would love to program for. I reasoned that this would help them to quickly ramp up application development so that they could compete with Apple. Also, they are taking the ‘total control’ strategy of hardware and software just like Apple has shown to be effective. However, now that we see that Palm has announced the Pixi that runs the same OS but with slightly different specs (the screen resolution is different, for example) they are treading into the no-man’s land of controlling the hardware platform, but offering different variants of the platform. Apple has a slight advantage here, since although there have been three generations of the iPhone, their hardware capabilities have been mostly compatible. There haven’t been screen resolution changes or anything major like that.
What has happened though, is that no one seems to be developing for the Pre even though they have a familar web stack rather than the proprietary Objective-C stack that Apple has. It costs a lot of money to develop an iPhone app since the programmers that know Objective-C well are relatively few and they are in demand. So it looks like the development platform really has less to do with app numbers than I thought. Palm is now solidly a third-runner in the `2.0′ smartphone game. Google is doing what Microsoft did in the desktop OS market against Apple in the 90s — unbunding the OS from the hardware platform. This strategy proved incredibly successful for MS in the desktop arena, but they failed miserably at applying the same model to the smartphone OS arena with Windows CE and Windows Mobile. The biggest question I have with Palm now, is where do they fit? Is there room for more than one provider of bundled hardware and software in the smartphone market?
I think that Palm has done an outstanding job product and platform wise. From a marketing and business development standpoint, they didn’t get things off to a good start. They missed their window of opportunity to break into the market in a big way, and now they are going to be playing a very long game of catch-up if they are going to stay in the market. However, I could see them being a juicy acquisition target for a big tech player wanting to dive into the mobile market.