Palm to focus on software, wireless service

NEW YORK--If the first half of 1999 was dedicated to Palm Computing's market-leading handheld hardware, the second half will be focused on software improvements and key licensing plans, according to Palm's president.

During the next six months, Palm Computing will release two updates to the Palm Operating System (OS), pioneer larger handheld systems, and aggressively step up its licensing plans, Robin Abrams said in an interview at the PC Expo trade show here.

"For us, it's all about momentum," Abrams said. "How do we grow our market? We enable the platform."

Palm has released three new handhelds this year, the Palm IIIx, the Palm V, and the Palm VII. However, with the exception of the Palm VII's Palm.net "Web clipping" service--which allows limited, wireless Internet access--the new devices did not offer many enhancements in terms of the user interface or functionality. The lapse was made all the more apparent by Microsoft's introduction of a color version of the Windows CE platform for palm-sized devices, although an LCD shortage delayed the availability of these products.

Focusing on software will allow Palm to add color and change the design of its devices, Abrams said. In addition, software changes will likely mean expanding the base of hardware and platform licensees and will also likely boost the company's recent efforts in the wireless access market. The improvements will result in new designs and features for the Palm, as well.

Over the next months, Palm will also continue its push in the wireless space, Abrams said, rolling out the Palm VII and the Palm.net service nationwide in the fall. Palm today announced a deal with America Online that will bring AOL content to the wireless Palm VII devices via the Palm.net wireless service, she said.

"Our next major drive is the wireless space," she said, explaining that the company's wireless products have become a separate business unit, just like the OS and hardware groups. "We're going to see a wireless explosion."

On the software side, Palm will introduce new operating system upgrades in July and December, she said. "We have an 18-month road map for the operating system," she said. These releases will enable new and larger display sizes, broadening the designs available for licensees.

"We will release a reference platform," she said, for three larger display sizes. She stressed that while the improvements to the operating system will allow Palm's manufacturing partners much more flexibility when it comes to features, new Palm handhelds will not necessarily mimic existing larger devices offered from Microsoft and its partners.

"It's all about what the OS will accommodate," she said, adding that any Palm licensees would offer the company's HotSync and PIM (personal information manager) features and in some cases the Web clipping technology.

"When you dominate, you have to ask what you can do to expand that market," she said. "The answer is to enable other form factors?We have an aggressive OEM [original equipment manufacturer] approach."

Handspring, a company founded by some of the original creators of Palm, is a licensee and is expected to come out with a sub-$200 product, sources said.

In addition to revamping the operating system to enable larger devices, Palm is working hard to answer the one clear advantage Microsoft has over the PalmPilot: color displays.

Color displays, such as those seen on Casio's Cassiopeia E-100 and Hewlett-Packard's Jornada 420, offer users obvious advantages when viewing some content. However, color displays in general can be bulky and are known to quickly drain batteries. Palm is currently testing various solutions to these problems, Abrams said.

"Color is very important to Palm-color done right," she said, noting that Microsoft was forced to offer color displays because its black and white models were difficult to use.

"Windows CE doesn't work in a black and white environment," she said.

Because of the technology complications associated with providing color displays, a Palm licensee might be an ideal way for the company to offer the new screens. "Wouldn't it be interesting if a licensee was the first," to offer the displays, she said. "That's what licensing is all about."