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Handhelds Hardware

Indepth On 3Com and Spinning Off The PalmPilot 43

Posted by Hemos from the getting-all-details dept.
We recently covered the possibility that 3Com would spin-off their PalmPilot division. There's been an increasing amount of confirmation about this move, and C|Net has done an indepth look at the story. From the perspective of how business operates, it's an interesting story alone, but it's even more curious in light of the recent announcement regarding the Handspring. Where do you folks see the PalmPilot ending up?
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Indepth On 3Com and Spinning Off The PalmPilot More

Indepth On 3Com and Spinning Off The PalmPilot

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  • I keep phone numbers, to do items, memos, my check book, novels, calculators, and more stuff on one little device. I'm too absent minded and forgetful to carry around a lot of scraps of paper and my handwriting is attrocious. My Palm III has made my life ten times easier.

    And incidentally, I recently had to give my PIII a hard reset, deleting everything in memory and guess what? I hotsynced it and everything came back automagically. That you Backup Buddy!
  • I just finished Clay Christensen's book 'The Innovator's Dilemma' and I think that book has some implications for the 3com/Palm deal. The book talks about disruptive technologies coming into an industry and killing established firms because they can't wrap their minds around the new uses of the tech. I think the Palm is a definate distruptive technology and as we can already see, the technology was pretty much floundering in 3com's corporate structure. By spinning off Palm into a company that must fend for itself and can do so without the "establishment" at 3com butting in, they are saving the Palm I think. A small company can sell less volume into new markets (such as handhelds for collge students or cops or doctors) that are uninteresting financially to the larger company and they can still make a profit. One of Christensen's things in the book is that companies that want to take advantage of a distruptive technology must form a smaller company the size of the market for that tech so it can explore smaller markets without having to find markets of a size that would impress the much larger parent company. If 3com leaves Palm Computing alone and let them innovate, I think it would be very healthy for them.

  • Re:a few things don't make sense to me (Score:4)

    by Croaker ( 10633 ) on Monday September 20, 1999 @12:23AM (#1672651)
    1) I wonder if Hawkins & Co. didn't have some sort of card of their sleeve for this. Maybe, as a price for parting amicably, they got a license for the OS. It seems obvious now why Hawkins and Dubinsky bolted... they had a vision for the Palm that included expansion and driving the units down lower in the market. Palm itself seemed happy to be making expensive nerd toys. They probably had a good grip on the arms they needed to twist in order to get what they wanted. And, on the surface, licensing the OS doesn't seem like a dumb thing to do... expand the platform's acceptence, yaddah yaddah. It's only when Handspring proves they can make a better Palm than you for less money do you smakc yourself in the forhead and yell "d'oh!"

    2) I dunno. I sort of doubt that Dubinsky and Hawkins would have been dumb enough to walk onto a plank that someone could snatch out from underneath them, though. They didn't make the Palm #1 by being dumb.

    3) 'Cause it's neat? Cause you could link a whole lot of them together and get a Beowolf cluster less powerful than a standard desktop? The nerd's urge to do inappropriate things with inappropriate hardware just is. You shouldn't question it, because sometimes the results are useful. Like the personal computer, for example.
  • I think 3Com spinning Palm off will allow Palm to adopt and change more quickly. It will be easier to innovate. It will be a better company for the most part. I just worry though that smaller companies such as Palm and Handspring won't have the deep pockets to weather the constant pounding of the WinCE storm. Every company is bound to slip once in a while, I think this is where Palm is now. They have a near perfect product and rested for a second while a competitor (Handspring, which is very good. They are growing the total market, not taking away 3Com's sales.) caught up. I'm sure by spring we will be hearing about a Palm X which will have the expansion slot and everything else, but until then we are left to wonder if little companies without deep pockets can survive. Remember, buyouts and mergers seem to be all the rage; is this the future for the new PalmCo? Sollowed up by someone else?
  • The palm's PRESENT handwriting engine is Graffitti. We were instructed by the lord-hi-masters of /. to write about where we believed the FUTURE of the Palm was. Hence, I picked a small part of thier overall future. Any new handwriting engine will be ADDITIONAL to graffitti, not a replacement. But, like the Windowing front end to NT vs the command prompt, most people will use real handwriting over Graffitti.

    Graffitti was 1st released as a product for the Newton to make up for the sucky nature of Rosetta 1.0. I understand why the ship date for the Newton was met, but the product was not ready. Memory of the sucky 1.0 release, combined with being mired in Apple is what helped to keep the Newton to what it was.

    The last release of NI (Newton Intelligence) was 2.1, and the rosetta code in there works QUITE well. Combined with the 161 Mhz StrongARM processor and the handwriting is as good as it gets....Well, ok as good as it got. No hesitation, it just worked.
  • My impression was that 3com bought USR, who had previously bought Palm. They wanted the modem buisness and got the Palm as a bonus. They want to focus, so they let Palm go and keep a chunk of stock just in case. Makes sense to me. What I want to know is whether 3com is keeping the PalmOS. Does it leave with Palm computing or do they continue to license to both them and Handspring? That makes things more interesting.
  • It makes perfect sense for 3com to spin off the Palm division: it is not a core business operation, and it is profitable. (3Com really isn't a well managed company, or from what I understand, a good place to work. Good way to improve the image of a group that has real potential!)

    What worries me (yes, as a stockholder) is that I really think that the palm devices should be integrated into their core business functions.
    I think that the concept MS had for CE is cool... embedded devices with a common interface and programming language that makes it easy to write applications for something. Fortunately, though, they really botched their attempt, making it do too much, too soon.

    There are so many things that you could use these little gismos for... one company can't focus on all the applications. From embedded controllers to tethered computers to waterproof pda's... there are so many ways that you could use the platform that licensing the OS is a smart thing to do.

    I just don't understand the attraction to the colors for the high-end Visor. I was going to buy one, but... it looks like a pager for a 12-year-old! I'll wait for the Vx, I guess... unless someone knows who makes a unit that lasts for more than 9 months!

  • Actually, with the ucLinux [uclinux.org] project, you can load Linux onto a Palm. However, you'd have to be a moron to delude yourself into thinking that Linux is any more useful on a PDA than Windows is. The vast majority of Linux programs are either too large for, incompatible with, or unnecessary on a small palmtop computer. By contrast, PalmOS (and, for that matter, WindowsCE) programs are designed to be used specifically on this hardware platform.
  • Not quite. 3Com will retain an 80% stake in Palm, and will IPO only 20% of its value. In short, Apple can't buy Palm any more than Microsoft can buy Red Hat.
  • when are they shipping!? It's been months (well, at least 6 weeks) since they said they were shipping!

    What i like about the ucLinux is that it has built-in networking... a lot more flexible for some applications... cool toy, at least...
  • All of this is, of course, IMHO... As a Palm loyalist, I am hopeful they will continue to dream-up, create and produce wonderful tools for us to use. As a consumer, I am concerned about things like the releasing of the IIIx (I have one) and soon the Vx, without any of the expansion devices they are designed for. If Palm or a peripheral vendor announced add-ons for the slot real-soon-now I would continue to be hopeful about the future of the Palm brand specifically. But without the design and products they have out there (or will soon) and instead focusing on cosmetic features only, then I would say the white flag is out and the spin-off is just to dump the baby out with the bathwater before those college bills come due. I want to believe consumers haven't tossed their cash away on the IIIx, but if we have, I know that it will end my relationship with that brand of handheld (and I'm into my third generation of Palm's). And with more choices out there, I won't have to cry too much, as long as my data sync's over.

  • Palm has a ton of potential and a good chance of raising serious amounts of capital in an IPO. As an independant company, Palm has the best chance of getting the funding needed to battle MS-Wince.

    Within 3COM, Palm is a nice, profitable unit, but not big enough to carry the company. 3COM would have to choose between financing Palm and putting more resources into the battle with Cisco.

    By selling Palm off 3COM gets a good chunk of cash plus gives Palm the resources it needs to succeed.

    1. Because they're not Apple. :)

      Seriously, though, it is a good thing for them to let other companies build Palm spinoffs. It enhances the Palm OS's position as the OS of choice for PDAs, much like the PC clones did for Microsoft Windows. A greater number of Palm devices also gives the PalmOS more counter space at Overpriced Computer Retail Store.

      In addition, the new licencees of the Palm OS are forced to try new things in order to differentiate their devices from 3Com/Palm's, so you will see more variety in software, or more radical features. Lots of these new features will tank, of course, but even so, Palm gets their money up front, and the failure of the 3rd party PDA won't really reflect badly on them. If a feature sells, Palm can add it to their lineup the next model year.

      As to Handspring taking over from Palm, we'll wait and see. I expect Palm to slash prices on their devices. Since the Palms have less complicated hardware, are already in production, and don't have to pay for the OS licence, I expect them to be able to undercut Handspring's pricing. Plus, Palm has the advantage of being the recognized brand, whereas the Handspring carries the stigma of "Is it really compatible?"

      Lastly, more Palm devices == cheaper prices for the CPUs and displays.

    2. Yanking the rug out from under Handspring would be STUPID. It would build up ill will with your user base. Also, see above for advantages of third party Palm device makers.

    3. Now here I completely agree with you! I don't want a mini-PC, I want a pocket calculator that stores my grocery list!
    Jon
  • And AGAIN, the original Tandy was a Newton OMP...from the software end.
  • A response, in three parts =)
    1: By licensing out their OS they can get a royalty per sale, much like M$ gets a fixed sum per PC sold because it comes bundled with the system, and not have to deal with the manufacture, sales, advertising, or development costs of actually building a system. In this case say Handspring outsells a Palm 3:1 because of price, features, and color--Palm still gets royalties which are essentially pure profit, as well as grabbing more market share because WinCE machines, if they couldn't keep up with the Pilot, they certainly can't keep up with the Visor.

    2: I don't know. I don't think they will yank out from under Visor because in interviews they have explicitly said they want to avoid the traps and pitfalls that Apple has gone through =)

    3: Because it's there. Because it's a Motorola 60480 whatever CPU that was in the MacII or something. Because they are bored. Because they are geniuses. Because they are morons. =)


    -AS
  • Sure, you can take notes with pen and paper...
    But can you check your email? Can you pretend to take notes while your boss/professor yaks endlessly and really be playing Galax? :)

    And if you can carry all your spreadsheets and important documents, appointment books, calendars and diaries (years and years worth even) in your pocket instead of having to lug a hefty briefcase or knapsack around, what's wrong with that?

    Not all things trendy suck; sometimes it's just a case of the majority realizing that something really useful to a few people could be useful to them as well. Three years ago people used to bug me about my phone always being busy because they didn't understand why I needed the phone line (guess they thought my computer had a telepathic connection to my isp!), and now almost everyone I know has an email address.

    Lia

  • If you read this article, a suspicious number of links are to stories that were covered here recently.
    THings are about to get really circular; next week cnet'll have a story about this story about their story about...
    I need to sit down.

  • Palm is doing very well. I simply can't understand why 3com would spin them off. 3com is pretty well known, and I think by losing the 3com name Palm will only be hurting themselves.

  • Wife

    "So... you forgot our anniversary again?"

    ermmmm... me

    "Umm... no, i was just going to surprise you and give you a present on another day. you wouldn't be expecting THAT!"

    Wife

    "Well, that's it... i've had it with you... we're going to the doctor first thing in the morning"

    you get the idea

    "NOOOOOOOOOOOOOOOOOOO!"

    Next Morning

    Quack

    "This is a relatively painless procedure. We simply replace many of the bones and tendons in the right hand of the patient with a PalmPilot. The retain full hand functionality out of some magical power of the PalmPilot, and they never forget a date, ever again!"

    Wife

    "Sounds wonderful. Go for it!" (In the background "...NNNNNOOOOOOOOOOOOOO...")

    ---------------------

    The future of PalmPilot... interesting... scary... get your copy today!

  • When Jobs cancelled the Newton spin-off, a group of 30+ Newton Engineers and support staff all left for Palm.

    Given the printing engine is Apple's IP, and if Palm were to come out with a print-engine for the Palm, Apple would sue based on the 'fact' that their code was now on the Palm. (The truth of such is not important. The money for the Lawyers is what matters)

    So, if Apple does a palm-based machine, the quid-quo-pro will be the rights to the handwriting engine.

    The Second thing on tap....a faster dragonball
  • But people should know about the /. article that has been pulled from the index page.

    http://slashdot.org /article.pl?sid=99/09/20/0744243&mode=thread [slashdot.org]

    I know this is completely irrelevant to the article but I can't believe that no explanation has been offered on why this was pulled.

    Moderate this up, the /. community wants to know.
  • it is a yuppie trophy, and one I would like to see the back of. i do believe some people need one, but if you're having problems remembering phone numbers, pen and paper may well be more suited to your task. and it's easily rechargable without losing everything in volatile memory.

  • Lotso' Growth.... (Score:3)

    by Rabbins ( 70965 ) on Sunday September 19, 1999 @11:53PM (#1672671)
    By many people's estimates (including Microsoft, who has been laying deals left and right), the hand-held PC market is going to be a huge growth area over the next decade.
    By spinning off the Palm division, 3com will still be maintaining a controling interest in the new firm, but more importantly, it will be able to financially benefit as their shares in the company rise to what I believe will be a very lofty height, as most "hot" items do.

  • I dont agree. I think "PalmPilot" has become somewhat of a common phrase as of late, and I imagine that there are many people who know "PalmPilot" who dont know who/what 3com is, other than the fact that they make the Palm. I also think that Palm is more likely to get support from other companies, if those other companies dont think they are supporting 3com and all it's networking ventures. (For example, companies that may be competing against 3com in the networking business, but want part of Palm for its handheld uses)
    -Hal

  • Watch 3Com lose the market... (Score:4)

    by dmorin ( 25609 ) <dmorin @ g m ail.com> on Sunday September 19, 1999 @11:59PM (#1672673) Homepage Journal
    The Pilot jumped to the front of the pack because of Jeff Hawkins, and his approach to the design of the device. He didn't think primarily about the OS, or the cost, or the color. Read an interview with the guy, and it'll be essentially him talking about how he believes the human brain works, and why his devices fit that model.

    Now he's making a competitor to the Palm. And 3Com (soon to be just Palm) is stuck catering to the high end corporate accounts that can afford to pay extra hundreds of $$ for units with no upgrade path that are essentially variations on a theme over and over again. The Vx is the exact same machine as the V, except more memory. Why didn't some genius figure out how to make the V expandable (that is, "officially" expandable)?

    Hawkins and Handspring are taking a different approach. Lower the entry pricetag and target the consumer market. As a boss of mine said, "I've got kids entering college, there's no way I wouldn't get them one, priced right. But no way I'm spending $500 or more to buy them each a PalmV just because it's lighter." And the iMac-like (or is it Gameboy-like) color schemes don't hurt if you're going after a younger market. VP's may want the cool metallic look, but college kids want the yellow one or the orange one.

    What was a primary complaint about the Pilot? Addon devices. It was just the right size to fit into a pocket, so as soon as you stuck something on it like a pager or modem, it got bulkier. Handspring solves that by introducing an upgrade slot (external, not like the PalmIII's!) that only adds "wheat thin" sized cards. How does 3Com solve the problem? By introducing a series of machines (the V series) that aren't upgradeable at all?!

    I have a IIIx. I'm going to skip the V generation completely. Come Q1 next year, I'm probably going to become the first Visor person at my company. On top of everything else it's got going for it, it's still Palm compatible, so I don't even have to fight the wince vs palm battle.

    d

  • Not much to comment on. Palm gets one chunk of the market, Handspring gets another. Too bad you can't load linux on one.

  • Dilbertian Management... (Score:3)

    by Christopher B. Brown ( 1267 ) <cbbrowne@gmail.com> on Sunday September 19, 1999 @11:47PM (#1672676) Homepage

    At one point, it apparently was a "genius" idea to centralize Palm as part of 3Com's largely networking-oriented organization.

    We'll centralize and thus reduce communications costs.
    ... And everyone thinks this is a brilliant idea ...

    Now, it is apparently time to run through the other side of the argument.

    We'll decentralize so as to allow more flexibility

    Which is opposite to what happened last year, but everyone thinks this is a brilliant idea too.

    Scott Adams would be proud...

  • I bet it is something to do with those Infoseek banners that are in rotation at the moment...
  • And yet I was completely off track. It appears this was a simple user error: a case of "premature posting"...

    Boring ;-)

    Where are the sinister plots from the dark recesses of the sold-out /. ...?
  • Actually Graffitti was first released for the Tandy/Casio Zoomer PDA. Palm also wrote most of the PIM type apps for the Zoomer.
  • Uh, that was CNET's standard week-in-review piece, which would naturally contain a bunch of stories that Slashdot links to throughout the week. Which brings me to another point- that wasn't an "in-depth" piece on the story, it was a five paragraph summary at the beginning of a series of review pieces. Not that this is a major error, but wouldn't you think that the major portion of a $50 million (in (anticipated) market cap, anyways) business could bother to read the actual article.
  • Sooner or later Steve Jobs is going to buy them. 3com fought Apple off more than once, but now, if they are publically traded, all it takes is some money, and Apple has lots of cash right now.
  • They're spinning it off so that 3com the networking company can merge with Lucent, or some other telecommunications company. The Palm Pilot is in a different industry.

  • a few things don't make sense to me (Score:4)

    by Hollins ( 83264 ) on Monday September 20, 1999 @12:09AM (#1672683) Homepage
    Some questions:
    1. Why did 3Com license PalmOS to Handspring in the first place? This, of course, was a great thing for consumers, but seems like a bad idea for 3Com. So far, they've been able to artificially inflate the price of Palm devices by having exclusive rights to the OS and a following of devotees who love the interface and form factor of Palm devices. Now they have competition from other PalmOS devices (in addition to CE).
    2. What were the terms of the licensing agreement? Perhaps 3Com planned on using Handspring to gain market share for PalmOS before yanking the rug out from under them by not renewing the licensing agreement. This would be very similar to how Apple treated clone makers after Jobs came back. This strategy would likely backfire, as I think the Visor's expansion port is going to become a standard with a lot of loyal users.
    3. Mostly unrelated: Why do so many people want a Palm Linux port? I'm a Linux user and I love the OS, but porting it to Palm seems silly. PalmOS is small, tight and fast. As long as we can sync to a Linux box, why cram Linux in there? If it's things like telnet and emacs people want, port these apps, but I don't understand trying to put Linux on Palm. However, my attitude toward this might change if Iomega can get a clic in a Visor.

  • Wall Street Journal had an interesting take... (Score:3)

    by Croaker ( 10633 ) on Monday September 20, 1999 @12:12AM (#1672685)
    The Wall Street Journal (and for the record, no, I'm not a subscriber... but that was all there was to read in the lunch room the other day... ) had an interesting take... Palm may be spun off to be able to get more and better employees.

    The idea works like this: If you're a nerd living in Silicon Valley, you're going to go to a company that offers the best stock incentives. 3Com's stock now is, shall we say, not the best incentive there is. However, stock in a company that the soley Palm would be hotter, giving them better recruiting clout.

    Interesting. I doubt this was the basis for the whole deal, but it may have played a part.
  • Sorry but isn't the handwriting recognition in this Grafiti - mine certainly uses grafiti - and Grafiti was around in a wierd HP organiser with a square 160 by 160 display which flipped over - palmtop style device with a near 260deg hing so it can fold back on it's-self and be used as a hadwriting driven device...

    Correct me if I'm wrong - I know you will...
  • I've never really been able to draw the connection between 3Com and the Palm; it just doesn't make sense. One brand doesn't help the other brand, and its not like they share any kind of engineering or manufacturing facilities. I viewed 3Com acquiring the palm much the way I'd view Apple announcing they were going to start making toothpaste.

    Since there are no special efficiencies that come from combining the businesses, the question is whether the income stream from the popular product will be more valuable than a big hunk of money up front. In fact, the buzz alone may drive up the new company's stock price enough to make 3Com stockholders very, very happy.
  • 1.Why did 3Com license PalmOS to Handspring in the first place?

    The handheld market isn't too different from the PC market of the mid-eighties, before Microsoft took it over. 3Com/Palm could go three ways: the Apple way, the IBM way, or the Microsoft way. The Microsoft way of licensing the OS and growing fat off the royalties made the most money before and 3Com/Palm is betting it well make the most money again.

    Even if 3Com/Palm never sells another PalmPilot again, they'll still collect money from every clone that gets sold. And given the possibility of fierce competition among clone makers, there is more potential for crowding CE devices out of the handheld market.

    Perhaps 3Com planned on using Handspring to gain market share for PalmOS before yanking the rug out from under them by not renewing the licensing agreement. This would be very similar to how Apple treated clone makers after Jobs came back.

    By the time that Apple licensed the MacOS, its market share was already declining rapidly due to bad marketing and "not invented here syndrome." The clone makers were just fighting for a piece of an already declining pie. And it never did license more than a handful of clone makers anyway. Apple's cloning experiment was never more than half-hearted at best.

    The PalmPilot's market share has been growing rapidly. And technically while Handspring is the first Palm clone maker, it isn't the first clone seller. That honor belongs to IBM which has been selling the IBM Workpad, a Palm look alike that is manucfactured by 3Com. Then there are also Qualcomm's PDq cell phone and a few other specialized PalmOS based devices that imply that 3Com had been gradually experimenting with cloning the Palm before opening the floodgates with Handspring. So pulling the rug out from under Handspring would probably do the PalmOS more harm than good.

    3.Mostly unrelated: Why do so many people want a Palm Linux port?

    They think it would be fun.

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