What happened to Palm?

Palm, Inc. was an American manufacturer of personal digital assistants (PDAs) and other electronics. founded in 1992 by Jeff Hawkins, its popularity tended to be restricted to early adopters. Despite the company revolutionizing mobile computing, it no longer exists today. Palm’s demise was caused by poor decision-making, squandered resources, and misplaced effort. The company got stuck in the “chasm.”

Aspect	Explanation
Founding and Early Success	Palm, Inc. was founded in 1992 by Jeff Hawkins, Donna Dubinsky, and Ed Colligan. The company gained recognition for its PalmPilot, a PDA that revolutionized personal organization and became a popular business tool in the late 1990s. Palm’s handwriting recognition software, called Graffiti, was also well-received. The company’s success in the PDA market established it as a key player in the tech industry.
Transition to Smartphones	As the PDA market declined, Palm shifted its focus to smartphones. In 2002, it introduced the Palm Treo, which combined PDA and mobile phone features. The Treo series gained a following for its QWERTY keyboard and mobile email capabilities. Palm’s early smartphones were popular among business users and tech enthusiasts.
Operating System Changes	Palm’s original Palm OS was replaced by Palm webOS, a Linux-based mobile operating system introduced in 2009. WebOS was praised for its innovative interface and multitasking capabilities. However, it faced tough competition from iOS (Apple) and Android (Google). Despite critical acclaim, webOS struggled to gain market share.
Acquisition by HP and Discontinuation	In 2010, Palm, Inc. was acquired by Hewlett-Packard (HP) for $1.2 billion. HP had ambitious plans for webOS and released devices like the HP TouchPad tablet and smartphones running webOS. Unfortunately, these products failed to gain traction in the market. In 2011, HP announced that it would discontinue webOS hardware, leading to significant layoffs and the discontinuation of webOS devices. The acquisition and subsequent failure of webOS devices were major setbacks for Palm and HP.
WebOS and Palm’s Legacy	After HP’s discontinuation of webOS hardware, the open-source community showed interest in the platform, and webOS was eventually sold to LG Electronics in 2013. LG used webOS for its smart TVs. Palm’s legacy lives on in the form of innovative software design concepts, including card-based multitasking and gesture-based navigation, which influenced the development of other mobile operating systems. Although Palm’s hardware presence disappeared, its contributions to the mobile industry continue to be recognized.
Brand Revival Attempts	Palm’s brand name saw revival attempts in the form of devices like the “Palm Phone” and the “Palm PVG100.” These devices aimed to provide minimalist, secondary smartphone experiences but did not achieve mainstream success. The Palm brand has since become associated with nostalgic value among tech enthusiasts.
Overall Impact	Palm played a pivotal role in popularizing PDAs and contributed to the evolution of mobile computing. Its devices were influential precursors to modern smartphones. While the company faced challenges and ultimately saw its hardware division shuttered, its legacy lives on in the mobile industry. Palm’s story serves as a reminder of the fast-paced and competitive nature of the technology market, where even innovative companies can face difficulties adapting to changing consumer preferences.

Table of Contents

Background

Palm, Inc. was an American manufacturer of personal digital assistants (PDAs) and other electronics.

The company was founded in 1992 by Jeff Hawkins, who together with Donna Dubinsky and Ed Colligan invented the Palm Pilot. The Pilot was one of the earliest and indeed most successful PDAs of its time, making the Palm brand synonymous with technology and innovation.

Although a revolutionary product, the Palm Pilot was not a mass-market consumer item and its popularity tended to be restricted to early adopters. Nevertheless, it was less than half the price and more feature-rich than its main competitor the Apple Newton.

technology-adoption-curve — In his book, Crossing the Chasm, Geoffrey A. Moore shows a model that dissects and represents the stages of adoption of high-tech products. The model goes through five stages based on the psychographic features of customers at each stage: innovators, early adopters, early majority, late majority, and laggard.

Palm also created several versions of webOS – an operating system for smartphones, and the enyo.js HTML5 framework for apps.

Despite the company revolutionizing mobile computing, it no longer exists today. Palm’s demise was caused by poor decision-making, squandered resources, and misplaced effort.

Let’s tell that story below.

U.S Robotics Corp. acquisition

The trouble began when the Palm founders sold the company to U.S. Robotics to fund their first product launch.

Unfortunately, securing the necessary funding came with a heavy added cost. Hawkins, Dubinsky, and Colligan lost control over the company and the product forever.

One year later, U.S. Robotics was acquired by 3Com. This caused the founders to resign and launch Handspring, the developer of the first mass-market smartphone called the Treo.

Meanwhile, 3Com made Palm an independent, publicly tradeable company in March 2000.

Spin-offs, mergers, and corporate mismanagement

In January 2002, Palm made the disastrous decision to spin out its software division into an independent company called PalmSource.

Just over twelve months later, Palm merged with Handspring and became PalmOne. In a rather convoluted process, PalmOne then spent $30 million buying the Palm trademark from PalmSource and subsequently changed its name back to Palm.

This was followed by another costly decision in December 2006 where Palm paid $44 million to access the Palm OS source code it developed and once owned.

Generic products

Corporate mismanagement also changed the very culture of the company. In the early years, Palm won multiple design awards for innovation with a laser-like focus on product quality and invention.

As the company started to become more successful, it became preoccupied with corporate partnerships, new markets, and bland product launches. Indeed, Palm products became progressively more generic and uninspired as control over the company shifted from product visionaries to executives in suits.

Competition and HP acquisition

While Palm smartphones were the first of their kind, they couldn’t compete with offerings from Blackberry and then Apple. Blackberry offered internet capability instead of just email, while Apple upped the ante significantly with the release of the first iPhone in 2007.

Importantly, the iPhone was a complete, standalone device that did not need to be synchronized with a computer like the Pilot. In response, Palm released the Palm Pre in 2009 which ran on a new operating system called webOS. The Pre was plagued with quality control issues, including screen cracking, faulty headphone jacks, and design issues with the slide-out keyboard. It was also built on underlying hardware which made it slower than the iPhone.

Palm could not compete with the emergence of Apple and was acquired by HP in 2010 for $1.2 billion. HP tried to address the quality control issues but was ultimately unsuccessful in increasing market share.

It later sold webOS to LG who now use it to power smart televisions. The Palm brand itself was later sold to a shelf corporation tied to the Chinese electronics company TCL.

Key takeaways:

Palm was a revolutionary producer of personal digital assistants considered to be the precursors to the smartphone.
Palm squandered its first-mover advantage because of poor decision-making and mismanagement. The company undertook a series of convoluted spin-offs, mergers, and acquisitions where funds were needlessly spent buying back its own technology and trademarks.
Palm was also handicapped by a change in corporate culture that favored bland and uninspiring products instead of innovation. It could not compete with Apple who embodied the innovative traits Palm once stood for.

Timeline and Key Highlights

Revolutionary Product: Palm, Inc. was founded in 1992 and gained popularity for its personal digital assistant (PDA) called the Palm Pilot. The Palm Pilot was one of the earliest and successful PDAs of its time.
Limited Mass-Market Adoption: While the Palm Pilot was revolutionary, it primarily attracted early adopters and did not achieve mass-market success due to its limited appeal to the broader consumer base.
Acquisition by U.S. Robotics: To fund their first product launch, the founders of Palm sold the company to U.S. Robotics. However, this decision resulted in the founders losing control over the company and its product.
Spin-offs and Mergers: Palm made several questionable decisions, including spinning out its software division into an independent company called PalmSource and later merging with Handspring. These moves led to a convoluted process and the loss of substantial funds.
Corporate Mismanagement: As Palm grew, corporate mismanagement changed the company’s culture, leading to a shift from product-focused innovation to bland and uninspired products.
Competition and Decline: Palm faced stiff competition from Blackberry and Apple, especially after the release of the first iPhone in 2007. Despite efforts to compete with the Palm Pre and webOS, the company struggled to regain its market position.
Acquisition by HP: In 2010, Palm was acquired by HP for $1.2 billion. However, HP’s attempts to address quality control issues and revive Palm’s market share were unsuccessful.
WebOS and Brand Sale: HP later sold webOS to LG for use in smart televisions, and the Palm brand was sold to a shelf corporation tied to the Chinese electronics company TCL.
Lost First-Mover Advantage: Palm squandered its first-mover advantage due to poor decision-making, mismanagement, and a shift away from innovation and product quality.
Legacy: Although Palm, Inc. no longer exists, its legacy as a pioneer in mobile computing and PDAs continues to be remembered in the technology industry.