Apple prepares Palm partnership

iPalm release gets nearer and nearer

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Analysis Having attempted to buy Palm Computing from its current owner, 3Com, and failed, it should come as no surprise that Apple interim CEO Steve Jobs might opt for an easier target: Handspring, the company formed last year by Palm founders Jeff Hawkins and Donna Dubinsky to create Palm-based consumer products. That at least is what the Apple rumor-mill has been turning out this week -- along with the fact that, like 3Com, Handspring passed on Jobs' offer. Again, no big surprise. Hawkins and Dubinsky formed Handspring to allow them to get back to what they both really wanted to do: run their own company and profit from their own work, Dubinsky handling the business side, Hawkins the technology. They couldn't get that kind of freedom from 3Com, and there's no reason to imagine they'd get it from Apple either. And Dubinsky once worked for Apple, back in the early to mid-80s, running part of its distribution network until the company's bosses decided to rebuild it from scratch. She calls the following period "the most miserable time in my career" -- hardly something that would endear her to working for the Mac maker again. But whatever the truth behind the rumor, it nevertheless highlights not only Apple's -- and, in particular, Jobs' -- love of the Palm, the device that got it right after it spent $500 million on the Newton getting it wrong. Ironically, by the time Jobs canned the Newton project, back in February 1998, Apple was getting it right. The MessagePad 2100 still has its fans. Still, given what it had cost to get there -- and the fact that the Palm was doing the same job, but better, smaller and more cheaply -- Jobs' logic wasn't entirely faulty. And don't forget, Graffiti, the Palm's text-entry technology was originally designed for the MessagePad, so Palm does, in part, owe some of its success to Apple. That may well underpin the ongoing relationship the two companies appear to have. There have been numerous and regular hints -- even before Jobs revealed in an interview with Fortune magazine that he'd attempted to buy Palm Computing -- that they have been working together. And co-operation is in the interests of both companies. For 3Com, Palm has quickly become one of its key earners, especially since its original cash cows, the modems it acquired when it bought US Robotics, and its own line of network interface cards, are now proving more of a burden than a benefit. The trouble is, the Palm OS has some serious competition in the form of Windows CE, and while the Microsoft product is not without its flaws -- quite a few of them, actually -- it does have a powerful brand name behind it, and it is improving rapidly. Palm needs to continue to innovate to meet that challenge, and the company knows it. Moving into mobile Net access with the recently released Palm VII is an example of what the company itself is doing, but it also realizes that it can't do everything on its own. That's why former Palm president Robin Abrams opened up the Palm OS architecture and initiated a licensing programme to encourage third parties to build their own Palm-based products and expand the platform's reach. In fact, that alone makes an Apple acquisition of Handspring seem unlikely -- why buy a company when you can simply buy a licence and do it yourself? Particularly when you can leverage your existing Newton technology -- technology that Palm would love to get its hands on -- to cut a very favourable deal. Graffiti is good, but true handwriting recognition is better. After the original MessagePad was justifiably pilloried for failing to deliver that very feature, Apple did a pretty good job getting it to work for Newton OS 2.0, and its technology would certainly form a solid base for any effort to transfer it to the Palm. Of course, Palm now has a new president, Alan Kessler, and he's yet to speak out on how he sees the company progressing Abrams' expansion strategy. Meantime, what's in it for Apple? Handheld PCs -- or 'PC companions', as Palm, rather more accurately, puts it -- are at last beginning to move out of the 'executive toy' market, and the technology they provide is finding roles in new arenas. As cellphone developer Nokia has found with its Communicator, a mobile phone/PDA combo, smart communications products are becoming increasingly popular, and it's not hard to foresee a convergence of all these wireless personal communications and information products. One of Jobs' models for his vision of Apple is Sony, and that means broadening the company's range beyond simply making and selling computers. To do that, he needs two things: a very strong brand that will support the company as it moves into areas it's not traditionally associated with, and you need products and service markets that you can use your existing expertise to leverage yourself into. Apple has the brand -- in spades -- what it needs now are those wider markets. Becoming an Internet Service Provider is one example, moving into the personal communications arena, using a mix of Newton and Palm technology is another. If the hints that Apple and Swatch are co-operating on an 'Internet Time' watch prove true, there's a third. And then there's the comment ex-Palm president Robin Abrams made at the Demo Mobile 99 conference in San Diego early last April that Palm clones would ship within six months. Given how far Apple has come with its own Palm development efforts -- if the hints emerging from Cupertino are anything to go by -- Abrams' claims seems particularly apposite. Sounds like there are going to be a lot of very interesting announcements at MacWorld Expo later this month. ®

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