The New Palm. Same As The Old Palm?

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It appears in early January that Palm will announce their new operating system, devices and direction. It is believed that the new Palm will also be the only Palm operating system used by the company, dropping the old Palm OS and Windows Mobile in favor of this new platform. (They’d keep supporting WinMo for its corporate clients only.)

I’m skeptical that Palm can survive this transition. It isn’t 1996 any more. The mobile market back then had no major players. Palm was able to build every thing without having direct competition. Now all parties — customers, carriers, developers — have huge expectations. And there may be too much history with all three for Palm to woo them back into the fold. A brief explanation for each:

Customers
Customers have spent the past six years hearing how Palm is bringing out their next operating system. Most seem to have migrated to Windows Mobile, BlackBerry and iPhone at this point. Let’s face it, the Palm OS is antiquated, looking and feeling like yesterday’s technology. And with the company on the ropes financially, there is a big dis-incentive to acquire one of their devices.

Apple was in a similar situation when Palm was coming into existence ten years ago. Apple, though, had a legendary founder back in the fold and a new deal struck with Microsoft to ensure its survival. Palm will need some similar move to live through this one.

Carriers
There’s an interesting alignment occurring among the carriers here in the States. Exclusives are all the rage. Apple partnered with AT&T, RIM launched its BlackBerry Storm exclusively with Verizon, and Google launched Android exclusively with T-Mobile. On the surface we are returning to a world where if you want a certain device you have to switch carriers to get it.

It makes sense for carriers and companies to partner like this, of course, as developing hardware for one specific carrier platform is a lot more efficient than doing it for all of them. And the carriers can push one major product, differentiating themselves from everyone else. But if this trend holds true, it also has the effect of locking out new participants in the market. Where does Palm go? Sprint, a distant number four in the carrier races? Well… they did with the Centro. But this doesn’t necessarily get them the exposure they need to be successful. And what happens when Nokia comes calling? Does Palm get back-burnered for the next latest and greatest? It’s a vicious cycle: Palm comes out on a smaller carrier, doesn’t get huge sales, the carrier then feels they wasted time and money and doesn’t promote the product, which then supresses sales even further.

Developers
Excuse my bluntness, but Palm screwed their developer community. In 1999-2000, Palm used to talk in terms of the Palm Economy. But when the chips were down rather than doubling down on its community, the company decided it was easy enough to make a quick buck off of us. Palm, who spent years wooing developers to its vertical markets, suddenly dropped those vertical markets leaving its developers to hold the bag. Resellers went from charging 20-30% of each product sold in 2000 to 65-70% in 2008 (for reference, the world’s largest online reseller Amazon charges 25% and holds physical inventory). In addition, they added restrictions on what we could do with customer information and required our own web sites to be removed from our products, meaning we had to develop a special version of our software for each reseller.

There are great alternatives out there now on other platforms. With Apple, RIM, Google, Microsoft and others, there is a direct marketing channel (or soon will be) that reduces our support costs by eliminating installation issues and charges a reasonable 20-30% of our retail price.

Given that, all will be forgiven if Palm can sell enough devices. At the end of the day, developers will gravitate toward any platform that sells lots of units and makes it reasonable for us to sell our wares.

But with the markets working against them on all three fronts, it will be quite a challenge to do so. If nothing else, Palm will have an intellectual asset that could be a catalyst for company acquisition. A year ago, with one outdated operating system and another licensed, Palm had nothing to sell. At least now, it might.

We’ll all find out the first week of January.

Economic Downturns Are Good For Business

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A few years ago, at the end of Infinity Softworks’ second act as an education company, we decided to raise a round of funding. To make a long story short, I concluded early in the process that that was not possible and abandoned the idea. But two years later, as I watch the news wires for funding deals, a whole bunch of education companies have raised money. While the timing didn’t work out for Infinity Softworks’ education plans, here’s hoping it does for FastFigures and our re-focus on business customers.

Well, that left me thinking. Some of our biggest markets for FastFigures include real estate, financial and investment services. Could we have better timing? Let’s see. A busted real estate bubble, the banking system struggling, and Dow Jones sinking like a lead balloon… great time to sell to those folks!

But the truth is it is a great time to start this business. These problems won’t last forever, and when these problems fade then we will be in a great position to grow with our customers. When everything was easy — when a house sold in a day — no Realtor needed to care about educating their customers about mortgages. The only expertise they needed was to get the offer in fast. Now, with Realtors fighting over a small collection of buyers, education and experience will be the key.

Seth Godin wrote in his post “Looking For a Reason To Hide” a very interesting piece of information: a large chunk of the Inc 500’s fastest growing companies were born in the days following 9/11. From the darkest moments springs new life. It’s true with the tech companies I have watched all my life, too. Apple, Microsoft, Oracle, Google, just to name a few, all born in the dark days of recession.

So we start slow, we put the pieces in place, we learn and listen and take action on that. And then when the market shifts, if we’ve done a good job of learning and listening, then we will be ready and waiting to grow!

Dear Microsoft

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Steve Ballmer
Microsoft
1 Microsoft Way
Redmond, WA 98052-8300

Dear Mr. Ballmer:

I am concerned about Microsoft. The last decade has not been good to the company. Sure, it still owns the desktop operating system business, dominates the office suite and makes big money on servers and development environments. But there is something missing. To be honest with you, I think Microsoft has lost its way, it mojo so to speak. And I can tell because the developer community is no longer afraid of you.

Your business is assaulted from every direction. Linux has grabbed hold of IT departments. Google has become the thought leader on the web, destroying you on search and starting to challenge you in office suites. Open source is providing a bevy of development environments, all for free. Firefox is eating away at your dominant browser position. Apple has wrestled design and thought leadership away on mobile devices and laptops. Amazon is winning the race to be the web’s “operating system.” Nintendo outplayed you in game console systems.

Once upon a time, Microsoft was a visionary company. You took a concept like email and incorporated it as one piece in a grand vision to organize and manage personal information. That changed the game and wiped out Eudora, the market leader at the time. I think you can do the same kind of thing now, change the rules of the game and bring computing power to the masses, only this time on the web.

The strategy I am proposing here is perfect for Microsoft as it all relates to your existing businesses. Only this time, it’s on the web:

1. It’s about data. I am end-user and have data everywhere. I have it on cell phones used by everyone in my house and business, I have it on multiple computers, I have it on a personal server, I have it across the web. What I need is someone who knows how to extract all this information, put it in one secure central place so it can all be accessed on the web and on all the devices. Microsoft can do this. And it just so happens that you have a head start: you already have the technology to do this. Exchange works with all kinds of computers, servers and mobile devices. But what we need is not Exchange for IT pros but Exchange for the rest of us. I want to be able to enter an appointment on my BlackBerry and see it appear on our family’s web site calendar and my business calendar and on my business partner’s BlackBerry so she knows not to schedule that phone meeting then. And I want to buy a new song and have it appear on my wife’s laptop without having to think about it. And the same for pictures and video and every other piece of personal information. There’s plenty of money here. And that should make your shareholders happy.

2. It’s about developers. What was amazing about Windows is that it made operating systems useful for all of us, not just the nerds in the IT department. I don’t have to remember obscure keystrokes to make it work, it just works. This time it is not about end-users, though, but about people with ideas, whether they are developers or bloggers or just need to promote themselves. The web is still a bit like DOS. I have to know how to set up a server, databases, load balancing, run-time environments and such. It’s a real pain. And, of course, then I have to keep it running and make sure I don’t run out of server space or bandwidth or… I think you get the idea. I don’t really want to deal with this stuff. I want to create amazingly cool web apps. I want to share my ideas. I don’t want to be a systems administrator, as the current web provider’s require me to be. Microsoft could be the infrastucture for the world wide web, providing a platform for developers who wish to pay (think monthly fees) or don’t (think search placements).

3. It’s about business. It used to be that when you needed an application to run your business, you turned to Microsoft. But this is going to change as apps move online unless Microsoft moves too. Let’s face it, today this web-only approach by Google and others doesn’t work all that well. It’s slow and a little painful to use and I have to worry about working on my spreadsheets on the airplane. What they are really good at, though, is getting feedback on something as the web makes a great place for collaboration. You are uniquely positioned to offer online and offline versions of the products every business relies on. I know you risk cannibalizing your business, but for $50 a year you could charge for Word, Excel, PowerPoint and Outlook, giving users both an online account and the software to load locally on their Windows or Mac computer. Anything I do locally automatically syncs to the server and others — with permission of course — can review and make changes and share their thoughts, wiki or subversion-style, all of which gets synced back locally. Now, I never have to worry about being out-of-date on my software and you have taken a big headache out of my daily life: sharing and soliciting feedback happens automatically.

One thing Microsoft has been amazing about in the past is re-inventing itself. It did this with operating systems, dropping DOS line entry system for a Windows interface. It did this with browsers. This, of course, is a bigger transformation than what the Company has done before. But it’s time, before we in high-tech start thinking about Microsoft like the rest of the country thinks about General Motors.

I hope you will take my suggestions seriously. After all, the last thing we need now is only one behemoth, destroying innovation and taking advantage of small companies. With both you and Google at each others throats, fighting like Mothra and Godzilla over dominance of the web, we’ll all be a little better off.

Godspeed.

Elia Freedman

A Tail of Two BlackBerries

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Any minute now, RIM will launch the BlackBerry Storm here in North America. There is quite a bit of excitement around this device. Personally, I have played with the simulator and it looks nice. But the most important thing most of us do with a BlackBerry — email — requires a very good keypad. We’ll see if this one lives up to the hype.

I have bigger concerns, however, for RIM. The release of a touchscreen model splits the company. Now, resources need to be divided between non-touchscreen (keyboarded) devices and touchscreen devices. And this is dangerous territory. When device and OS companies have split their attention before, it has not ended well.

Let’s start with some examples of companies who have attempted to bifurcate their attention and struggled to maintain their leadership position:

  1. Palm: Every company that licensed the Palm OS added their own changes. And then to compound the problem, Palm developed both Windows Mobile and Palm OS devices.
  2. Microsoft: There are actually two completely different versions of Windows Mobile, one for touchscreens and one for keyboarded devices.
  3. Motorola: Linux, Windows Mobile, Android, Symbian… Motorola has licensed all of these at some point and at least released devices with two of the operating systems.

Even big companies struggle with split attention. (Think of what it does to start-ups. I should know!) There is just no way to do something really really really well, like RIM has in the past, while trying to do two completely different things at the same time.

On top of this, it splits the developer community. All of a sudden, we are forced to make decisions about which individual devices to support rather than supporting a platform. Not only is it harder to make a profit, it’s also harder to support the customer who gets confused in their own right. (I can’t tell you how many conversations we have had regarding Windows Mobile: “We support this one but not that one.”)

Is this sour grapes? I don’t think so even though our powerOne for BlackBerry Smartphones doesn’t work very well on the Storm and that to fix it will take a major re-write of the application (to support one device from one carrier). It works fine on every other BlackBerry device.

The good news for RIM — and their potential salvation — is that they are still working on one operating system. From all indications, they did a good job of melding the touch interface and the non-touch interface together into one operating system code base, something Microsoft never did. And as we move forward and turn our attention once again to BlackBerry after we finish FastFigures Mobile for iPhone, we will already have a touchscreen device on the market to test against and will be able to re-write the application to support both touch and keyboarded devices.

Company Foundations: Money, Vision and Timing

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I have been thinking a lot about the keys to success for a company. In short order, they are money, strategic vision, and timing. If those three aren’t in place, then nothing else the company does will be successful. What I mean is without these three, excellent execution will mean nothing. Let me explain each.

Money

A company is only as good as it has money in the bank to strategize and execute. This has been Infinity Softworks’ problem the past few years. We never had enough money in the bank to give us enough time to build a comprehensive strategy and execute to it.

In 2001 and 2002, we raised $550,000 but because of the economic downturn at the time money was very hard to come by and we raised it in drips and drabs. The mistake I made was we used the money to meet current obligations rather than executing to a comprehensive plan. At least until the end, when we raised a large chunk all at one time and we used that chunk to build our education plan and go after it. In that case it didn’t work out, but that was because of timing not money.

Don’t take this the wrong way. I’m not saying how much money needs to be raised; I am saying that money gives a company time to plan and execute. When Infinity Softworks started in 1997, we had only a few thousand dollars to build the company with, not many dollars (particularly for the kinds of money being tossed around in those days). But we had time. We were are all young and had very low overhead. This gave us the time we needed to bring out our first products and start to generate cash.

As mentioned, money has been an issue the past few years. We took part-time jobs working for others so we could continue to build FastFigures. Now, we are in the process of completing a small round of funding. It will give us the ability to focus on building our strategy and executing to it effectively.

Strategic Vision

It is imperative that a company understand what it is doing and what it is aiming for. Customers, partners and employees all need to understand it. A vision for what the company can be makes everyone excited to work with you. I have to admit that Infinity Softworks was aimless for a while. I had a better strategic vision in 1998-2000 (the next generation of financial calculators) than I had in 2001-2002 when we raised money. The vision became muddied.

Finally in 2003, we focused on revolutionizing math education (focusing our class time on key concepts instead of keystrokes). It brought partners out of the woodwork. Customers understood it. And the company’s employees all had common purpose. We knew what we needed to do and, importantly, we knew what we should not do. When it fell apart in 2006 (see Timing below), we were aimless again for a couple of years while the vision around FastFigures formulated. Now we are back on track. I can see excitement in the emails and conversations with beta and other customers, and see potential partners becoming excited about it.

Timing

With all the money in the world and the perfect strategy, none of it will matter without the right timing. This was the doom for our education business. The timing was wrong. Monies for technology in the classroom were drying up at the same time that Palm was struggling and decided to get out of the handheld business. We tried to switch course, to move to the web, but we took with the move the same strategic vision. It didn’t fit with how technology was used in the classroom. So we struggled to find partners and customers who bought into our vision. It just didn’t match the market.

The timing has to be right. I was too early and customers weren’t ready to hear my message. If I was too late, then my customers would have found a good enough solution already.

I think our timing is right for FastFigures. From a technical perspective the confluence of mobile computing and web-based computing are making a lot of things possible that just weren’t even two or three years ago. Fine, as my customers have pounded into me, it doesn’t mean web-based apps running on smartphones. But it does mean an improved method for sharing data and interacting between the two.

From a business perspective the economic meltdown has made professionals the world over have to understand the numbers before doing a deal or giving an answer, something missing over the past few years. Are we too early? I hope not but I can only know this one in retrospect.