Palm-To-Palm Combat

The industry smirked at the idea of Palm's scaled-down computer. Now Microsoft, Philips and other giants are piling into the market

  • Share
  • Read Later

It seems so obvious now that it's amazing no one thought of it sooner: a computer that keeps track of thousands of phone numbers, addresses and calendar appointments, a to-do list and memos, yet is small enough to fit in your shirt pocket. When Palm Computing first introduced its tiny Pilot two years ago, the gizmo did all that and more--and hit the jackpot. Sales zoomed to a million, and everyone from Al Gore to Robin Williams was packing one. At $299, the device was cheap (for a computer), hip and elegant. But the real secret to its success? Simplicity. The Pilot was as easy to use as a calendar.

This week Palm will introduce a third-generation device, the Palm III. It will offer more memory, an improved screen and a built-in infrared beam that owners can use to wirelessly squirt their business cards at each other. But the one feature it could really use is an anti-Microsoft heat shield, because the Redmond, Wash., software giant is turning up the temperature on Palm.

Anytime a small company like Palm proves that a market exists for a product, it is rewarded with big sales--and big trouble, in the form of hungry rivals. Microsoft's master plan is to control--or at least put Windows inside--every access point to information and entertainment, whether it's a desktop computer, telephone, TV or handheld device. That kind of thinking has put the company under intense scrutiny by the Department of Justice (see TECHNOLOGY).

In targeting Palm's turf, Microsoft has introduced a new version of its condensed Windows CE operating system and enlisted a phalanx of manufacturing partners that plan to launch WinCE-based challengers against the Pilot in the coming months. "This is when the marketing battle begins," says Dataquest analyst Mike McGuire, who sees handhelds growing into a $2.7 billion business by 2001.

Palm grabbed an early lead because the power junkies in Silicon Valley couldn't believe users would want a computer with less, not more. President and co-founder Donna Dubinsky spent 18 fruitless months trying to convince venture capitalists and potential manufacturers that the key to selling handheld computers was simplifying them, not adding features. "Time after time, I'd go into meetings, and they'd say, 'You can't do a device like this without a PC card slot or a spreadsheet or whatever,'" she recalls. "But where was the evidence? It's very, very hard to go against the crowd."

Fortunately, she had Jeff Hawkins to back her up. Hawkins, 40, Palm's chief technologist and Pilot's creator, designed one of the first handheld computers, the GRiDPad, a decade ago. It was an engineering marvel but a market failure because, he says, it was still too big. Determined not to make the same mistake twice, he had a ready answer when his colleagues asked him how small their new device should be: "Let's try the shirt pocket."

Retreating to his garage, he cut a block of wood to fit his shirt pocket. Then he carried it around for months, pretending it was a computer. Was he free for lunch on Wednesday? Hawkins would haul out the block and tap on it as if he were checking his schedule. If he needed a phone number, he would pretend to look it up on the wood. Occasionally he would try out different design faces with various button configurations, using paper printouts glued to the block.

  1. Previous Page
  2. 1
  3. 2
  4. 3