The Rise of Palm: For Apple, the Road Not Taken

This week, we will get one of the best views on how well the separation between the Palm hardware and software units is going, and, coincidentally, we’ll also get yet another view of what probably would have happened had Apple taken a similar risk a few years ago and separated itself into hardware and software units. The fact that Apple missed a big opportunity resonates well with the conclusion that was inescapable once we saw how well the iPod did. Apple could have competed very well with PC vendors if it had stepped up to the challenge and not chickened out.

PalmSource, in its segment, is holding on to about 60 percent market share — according to numbers from IDC and the Dataquest unit of Gartner — against a much better funded Microsoft and a broad number of well-connected hardware vendors. Palm is doing this by leveraging available resources — like Intel’s StrongARM platform — and focusing on making its hardware even better. And this week, PalmSource is bringing out an upgrade that is equivalent to Apple’s Panther in terms of technology breakthroughs.

Apple has always felt it could not compete with other PC vendors, and the company now has less market share — at 2.6 percent worldwide — than some United States-only vendors. Don’t get me wrong: Apple still leads in design and marketing — in its segment — but PalmSource’s lead in market share is clearly demonstrating some strategies that Apple probably should have adopted.

Another reason to mention Apple in this context is that — as handheld computers grow up to challenge laptops — Apple and PalmSource actually might start fighting for business. Strangely enough, this war probably will happen in the media-player space before it happens in the laptop space. But the laptop battle is coming probably sooner than any of us think.

As of now, PalmSource is holding its own against much more powerful competitors that continue to execute well in their own right, and — quarter to quarter — market share is given and taken between these competitors with neither giving or taking share from the other permanently. With this week’s announcements, PalmSource is looking more and more like the software company Apple could have been.

PalmSource’s Next Operating Systems

PalmSource has moved to unique product names instead of numbers, much like Apple has done, but PalmSource is using semiprecious stones rather than jungle cats. Of course, there are more stones than cats, though I personally like the cat names better. I figure that in 15 years, the new MacOS will be called the Siamese — all big cats having long since been used. PalmSource’s new operating system is called Garnet, and the company’s next major release, version 6.0, will be called Cobalt. Both products will be available to OEMs in a few days, but while Garnet will appear almost immediately, it will take a while (probably about six months) for OEMs to bring out hardware tuned for Cobalt.

Like Apple’s Panther, Garnet is a release that offers substantial improvements in network connectivity. In a handheld computer, this means TCP/IP improvements as well as enhanced Bluetooth 1.1 support and better synchronization features. The company also has improved support for enhanced graphics resolutions — up to QVGA, a format that is increasingly important for those using related devices for presentations or multimedia.

Anticipating a greater need to support video-intensive applications — such as pictures and movies — the user-input area is collapsible with this version, allowing the small screen real estate to be maximized. Certainly, each of these improvements addresses existing or emerging user needs, but, like Panther, does not really change the competitive landscape. Taken together, the improvements simply make the products easier to use and more useful. This is great for a minor release but would be a disappointment in a major release.

The Next Palm Generation

Cobalt, as a major release, doesn’t disappoint. It is the first major result of the blending of the former Be Inc. — remember BeOS? — with PalmSource. As you would expect, we are talking about a rather substantial number of ex-Apple employees working on this project. When Apple effectively got out of the OS business, both by killing the clones and by adopting the BSD kernel, many of the developers ended up at Palm and Be — and those developers remain an incredibly impressive resource, especially since Palm acquired Be a while back, which only strengthened the team.

The strength of the OS team is showcased in Cobalt, which represents a technology improvement of an order of magnitude, much like Microsoft’s Windows 2000 release compared with earlier versions of Microsoft operating systems. Cobalt is now a fully multitasking, multithreaded and memory-protected OS. These characteristics mean you can make calls, check messages and listen to music all at the same time. It also means the system is both more secure and much more robust, with one crashing application relatively unlikely to take out any other.

The Cobalt user interface now builds on the improvements made in Garnet. The graphics and tabs, for example, are sharper and better looking, the status bar can be customized depending on need, and we finally get drag-and-drop file transfers.

Small Footprint, Big Improvements

Some of Cobalt’s improvements are in telephony, where PalmSource now will take some of the capabilities available only in the Handspring Treo and make them available to all of the other Palm licensees. Because this will go across several vendors, they have made improvements in how easy it is for a vendor to customize the interface for its hardware.

With a Cobalt device, you’ll be able to start multiple simultaneous communication sessions, a strategy that clearly anticipates VoIP. Finally, the dialer is better integrated with PIM applications, which is important given that we tend to make these transitions one-handed while doing something else (hopefully not driving).

However, the big push for this platform is graphics — anticipating a broader array of entertainment- and business-based multimedia applications. Well, who are we kidding? We are talking games and videos here. Yes, companies could use these applications for training, but for the most part we are going to be using them as a defense against boredom. Support for larger screens will be built in — OEMs used to have to pay extra for this — and I’ve seen the very impressive graphics demo.

GameBoy proponents can eat their hearts out, and — were I working on Microsoft’s new Portable Media Center — I’d start to worry. That’s because Cobalt will support many media formats, including ADPCM/PCM, MP3, MPEG 1 and MPEG 4. The Sync function has been modified to anticipate the related larger file types — with implications for moving multimedia to and from the device and for better integration with databases and training materials.

Keeping IT Happy

To keep the IT people happy, protected memory makes the platform more secure. IT folks will be able to implement a trusted-computer component that will help ensure that data and patches, if turned on by the user or IT organization, only come from trusted sources. There is a security module in Cobalt that can handle encryption, making this system vastly more secure then any other Palm platform product to date. Because the industry uses Outlook almost universally, this product has substantial improvements in Outlook integration.

Because IT departments, even more than users, tend to buy strategically, there are several forward-looking features built in. The products will support 256 MB each of RAM and ROM, providing substantial headroom for vertical applications and databases. Finally, IPv6 is built in, which anticipates a time when we will need additional Internet addresses.

In the end, what makes PalmSource’s Cobalt operating system fascinating to me is that it is one of those rare occasions when a bunch of ex-employees — in this case, ex-Apple employees — actually demonstrate to their old company that there was a better path. Over the next few years, the two companies increasingly will bump heads, and we’ll see whether the company with the better design and marketing team wins out over the company that is developing software independent of its hardware.

But then, we already know the outcome of that future battle, don’t we?