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Why Handspring came home to Palm

Family reunion at Treo 600 launch

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Handspring's roadshow to promote the Treo 600 swung into town this week, and it was an event full of resonances for anyone in the Palm community. It marked Handspring's farewell as an independent company, and its first product launch for the company its founders created, Palm.

Jeff Hawkins and Donna Dubinsky created Palm and left, reluctantly after Palm's owners 3Com refused to spin off the company in 1999. Now they've come full circle. The Handspring name goes, but the Treo brand will be retained by palmOne. (The two companies plan to move into the same office after Thanksgiving).

There was plenty to celebrate. The Treo shares the same name as its ugly duckling predecessor, but is a very different beast. Handspring's final product as an independent company, the Treo 600 smartphone, deserves to fly off the shelves.

But did Handspring President and COO Ed Colligan, co-founder, have any regrets? He told us that Handspring had just raised another round of funding and wasn't in a such dire straits it was looking for a fire sale. The executives had talked to other potential buyers, both in the computer and telecoms space, but he wouldn't say who.

It was made no sense for the family in exile to duplicate so many functions with Palm. And he told us that one of the first questions asked at the launch was a great illustration of why Palm made sense as an owner. A member of the audience asked if extended warranties - a corporate tick-list item - would apply to the Treo. Colligan said that with Palm's enterprise acceptance he could now walk into a major company and get a hearing.

(The absence of extended warranties has kept Sony out of the corporate market; and Palm-licensee Sony was mooted as a potential savior of Handspring). Of potential rivals, Colligan cited the SonyEricsson P800 as the biggest competitor, at least in Europe.

Hand shakes the Palm

Palm and Handspring competitive relationship was marked with plenty of stürm and drang. An exodus of talent followed the departure of the founders to start Handspring. Palm then failed, as Hawkins had predicted, to keep the new product pipeline busy. After Handspring launched by undercutting Palm on price and by adding features such as more memory and USB, Palm responded by cutting prices and, when new product did arrive, releasing such a glut of inventory into the channels that any chance of establishing products with healthy margins disappeared for Handspring. (The stylish Visor Edge was one major casualty). That disastrous decision by Palm cost it much of the $1 billion it gained from its IPO.

Was there anything Colligan regretted about the Handspring years? There was a long lull between Handspring phasing out development of standalone PDAs and the introduction of a profitable volume product. He wouldn't be drawn on that, but told us "the bubble" had had what he called a "ruinous" effect on the market. The bubble inevitably led to a crash, and far fewer people were prepared to spend $500 on a gadget.

And operator subsidies, too? Well, operators still subsidize devices but not as much as they used to, he agreed.

We had a brief chat with Joe Sipher, Handspring's VP of marketing, and a Palm veteran from 1993 until he left after leading the Palm VII project. He said the project had taken a year, with work starting in August 2002, which must make it the most rapid piece of product development he's been involved with. Although he joined Handspring after its first phone project - a GSM Springboard plug-in for the Visor PDA - was completed, we wondered if life had got easier for the phone designer? The radio, in this case from Broadcom, was now much more integrated.

We wondered if the vintage Ericsson-era antenna was really necessary on a GSM phone? (The Treo 600 comes in both CDMA and quad-band GSM/GPRS). He said it was, and the flakey reception inside the nightclub Handspring was using as a venue bore this out. With the move to higher frequencies, US networks simply don't have the penetration of European networks).

Sipher said that there were aesthetic considerations too. The team could have wrapped an internal antenna around the top of the device, but it wanted to leave the expansion slot at power button there.

Earlier Sipher had shown many of the user interface features which make the Treo 600 so appealing. Rivals, take note: it isn't good enough having great technology for its own sake, the technology has to be made accessible, or people won't use it. On the Treo you can add a hotkey to a phone book entry (or bookmark) and a long-press from any application will make the connection. For example, press and hold the 'r' key down to connect the The Register. The inbox threads SMS messages together, much like an IM conversation.

Sipher and Hawkins fielded some tough questions. There weren't any Bluetooth drivers yet, but support was on its way, probably supporting wireless headsets first. Voice dialing or voice memos aren't supported out of the box, and one audience member saw the ability to perform a DIY flash upgrade as an essential item. (It's hard to think of a handset vendor that permits this, although Motorola has been talking about OTA, or over-the-air upgrades).

Colligan promise of "a nice discount" for existing Treo users might have caused his next CFO a shudder: but palmOne shouldn't worry. With the Treo 600, it deservedly has a hit on its hands. ®

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