Partnership with Microsoft will allow tech company to tap into growth potential of smartphone business, writes Eamon McGrane.
Palm's remarkable transformation from down-and-out peddler of personal digital assistants (PDAs) to smartphone kingpin was underlined recently when it launched its new Treo 750v device in partnership with Vodafone and Microsoft.
This is the first time that Irish users will be able to experience a Palm appliance that utilises Microsoft's Windows Mobile 5.0.
Around this time last year, the two companies cut a deal for Palm to license Mircrosoft's mobile operating system, paving the way for Microsoft to stamp an oversized footprint in the mobile devices market and for Palm to practically consign its former operating system (the Palm OS) to curiosity value.
Although the company maintains that the Palm Pilot is still a reasonable chunk of its business, smartphones now account for 75 per cent of Palm's revenues. In other words, the company has gone from being a fully-fledged PDA manufacturer three years ago to owning, it claims, 33 per cent of the market in the smartphone sector today.
According to Palm's senior vice-president for global markets, John Hartnett, the move into the smartphone business will potentially yield enormous revenues. "The market is predicted to be worth €43 billion by 2009 and that's growing at a compound annual growth rate of 34 per cent," he says.
"If you compare that to the mobile phone space, that is a market it's predicted will only grow 6 per cent in that time.
"Furthermore, it's still something of an untapped market - only 3 per cent of people with e-mail inboxes use a mobile device to access it . . . that's a 97 per cent opportunity, it's extremely significant."
The fact that Microsoft has 140 million customers worldwide for its e-mail program, Exchange, was also a considerable factor for Palm to embrace Microsoft.
Interestingly, Palm has also changed its go-to-market strategy on this project. As part of its biggest marketing campaign to date, the new Treo will be launched in Europe first and then the US. Hartnett says that Europe is seeing significant adoption of mobile applications and a hefty 44 per cent of the €43 billion market will, he claims, come from Europe.
The device will be available in nine countries: Austria, France, Germany, Italy, Ireland, Netherlands, Spain, Switzerland and Britain on the Vodafone 3G/UMTS network, with more countries coming on board by the end of the year.
Palm's Irish research and development centre, which opened last year, played no small part in bringing the Treo device to market, as much of the quality assurance and testing took place there.
"The centre has exceeded our expectations," says Hartnett. "The talent we've been able to attract there has been incredible. The place is already filing patents internationally."
The Treo 750v will be priced at about €399 including VAT, and it will have a 25MB per month download rate for €12 and a 60MB per month download rate for €20. Colm McVeigh, head of Vodafone Ireland's corporate and business unit, says the tariff structure is fixed in an "all you can eat" model.
"People want to do more with their phones to help them be more productive, to access their e-mail, diary and the web. Data fees have to be flat because we want to encourage people to use the device so they're not afraid of incurring heavy charges," says McVeigh. "It's also a good model for the SME market, which is moving towards these devices."
Vodafone says the data caps allow for more than enough download activity and are based on previous customer usage profiles, though if consumers go over these limits, the caps will be revisited and a new structure worked out. According to Vodafone, charges for exceeding the caps will be approximately €1.75 per MB for the €12 plan and €1.50 per MB for the €20 plan.
