Mathias On Mobility: Palm's Cautionary Tale

Despite what Apple might tell you, the homogenization of the mobile user interface is now well underway, and it’s going to be hard to gain competitive advantage from the UI alone going forward.

As for apps, another GUI for programmers doesn’t help -- software remains expensive to write and port, and developers clearly prefer a big installed base -- think iPhone, again, and BlackBerry. Palm really has nothing to enable the firm to gain competitive advantage against these two leaders.

The real winner in the mobile OS space is going to be Linux, upon which, to be fair, webOS is based, for reasons of cost and popularity among programmers. And that cost element is critical. But since the OS alone provides no real competitive advantage, Palm is under significant software-related cost pressure to maintain the proprietary elements of its products -- not good, given how expensive programmers are.

Of course, so are Apple and RIM, but they’re selling well, and Palm is not. And, worse still, the entire handset space is ripe for consolidation, as innovation slows, big app libraries and installed bases dominate purchasing decisions, standards have a greater impact, and, again, cost containment is king. Asian vendors, who have the lowest-cost engineering and manufacturing, should do just great, along with those who really know marketing and work the channel appropriately (think Apple and RIM). Palm has none of these assets going for it.

Regardless, Palm’s current products really are terrific, and I wouldn’t hesitate to recommend them. After all, what’s the useful life of a handset? Two years, max. Palm will be acquired well before then, and customer investments will be protected in the interim. But victims resulting from consolidation are inevitable as the industry converges to common functionality as a result of product homogenization -- just as was the case with the PC.

Craig Mathias is a Principal with Farpoint Group, a wireless and mobile advisory firm based in Ashland, MA. Craig is an internationally recognized expert on wireless communications and mobile computing technologies. He is a well-known industry analyst and frequent speaker at industry conferences and trade shows.