Palm to hand out $150 million venture fund
By Paul Kapustka
Redherring.com, April 26, 2000
SAN FRANCISCO -- Palm (Nasdaq: PALM), maker of the successful line of handheld organizers, said it is readying a $150 million venture fund that will provide seed-level funding for companies working on technologies complementary to Palm's platforms.
"We want to take a proactive role in the development of our relationships with technology providers," said Palm CEO Carl Yankowski, who said the money for the fund would come from Palm, as well as several partners whom he did not identify. The fund, which will target technology startups in the network-infrastructure and wireless categories, will be formally announced "as soon as we can sign the [money] deals," Mr. Yankowski told Redherring.com Wednesday.
Such a fund fits in well with Palm's new strategic focus, which company executives explained in detail during a press reception here at the Palace Hotel. "We're going to focus on wireless solutions," Mr. Yankowski said, promising wireless Internet connectivity options for all Palm products -- past, current, and future -- by year's end.
Though Palm already has 65,000 developers, they've focused primarily on software applications, not on wireless infrastructure products.
READY TO TALK
Freshly out of its post-IPO quiet period, Palm broke the silence with talk about plans for whizzy new devices slated for near-term delivery, including a combination cell phone/Palm device, as well as Palm platforms with support for the Bluetooth standard, which lets nearby devices talk to each other wirelessly via a tiny, chip-embedded radio.
With all the subtlety of a ball-peen hammer to the forehead, Palm executives communicated their commitment to connectivity via several presentations and demonstrations Wednesday, focusing on applications and services, rather than the Palm devices themselves.
"This is not a PIM [personal information manager]," Mr. Yankowski said. "That was the Palm of two or three years ago."
Currently, only the Palm VII model provides built-in connectivity, via the wireless Palm.Net service hosted by Pacific Bell (a subsidiary of SBC Communications (NYSE: SBC). Though wide in coverage, the service is expensive. It's also limited in speed and throughput, a concern that Palm plans to address by making its platforms open to as many connectivity options as possible, going forward.
"We're service-agnostic," said Bill Maggs, Palm's new chief technology officer, who left Inktomi (Nasdaq: INKT) a couple months ago to join Palm. During the presentation, Mr. Maggs showed a kludgey demonstration of a Palm V connecting to the Internet via an infrared link to a cellular phone. Mr. Maggs also promised imminent announcements of a voice-enabled Palm platform, as well as a combo Palm/cell phone device.
"The idea is to make every Palm device ubiquitously connected to the Internet," Mr. Maggs said.
THE EVIL EMPIRE
While Palm, with more than 6 million devices sold, has the overwhelming share of the handheld device market (near 75 percent, most analysts estimate), it still faces considerable competition from Microsoft (Nasdaq: MSFT), which can dominate mindshare even when its products are substandard. On Wednesday, Palm executives conceded that Microsoft's recently shipped PocketPC software was an "improvement" over previous efforts, but also said that Microsoft and its OEMs still don't approach the market from a customer's perspective.
"We spend a lot of time figuring out what our customers need, and then move backwards to find the technology that can support those needs," said Alan Kessler, Palm's chief operating officer for platforms and products. "Microsoft still says, 'Windows is the answer' -- what was the question?"
Barney Dewey, a partner with the Andrew Seybold Group, a mobile-computing consulting concern, said that Palm is "way ahead" of Microsoft in the wireless-access arena.
"Palm has the upper hand, because they are able to integrate the hardware and the software," said Mr. Dewey. "Microsoft's OEMs will probably introduce add-on [wireless] products, but with partners like Nokia (NYSE: NOK), Palm will be able to provide integrated solutions a lot sooner."
But Palm also faces competition from the emerging field of so-called "smart" cellular phones, which can house small browsers for limited Web access. Mr. Maggs, among others, doesn't think that the cell phone is the proper form factor for more-complicated Web applications, like the application he showed on his Palm VII that offered real-time updated traffic maps of the Seattle-area highway system.
DIAL THIS
"You couldn't do this on a cell phone," said Mr. Maggs, who also said that cellular providers' historic tendency to promote closed, proprietary technologies would prevent them from ever achieving a critical mass of developers. Palm claims to have 65,000 developers.
"The phone market is just too fragmented," said Mr. Maggs. "Palm has critical mass."
Palm also has a stock price that is currently trading about $10 per share below its offering price of $38 per share, and far below the $145 per-share price at which the stock opened on March 2. Mr. Kessler, a former 3Com (Nasdaq: COMS) executive who helped lead Palm through its somewhat stormy management quandaries of the past two years, said the presence of seasoned managers like Mr. Yankowski (whose impressive r‚sum‚ includes stints at Reebok (NYSE: RBK), Sony (NYSE: SNE), Pepsi (NYSE: PEP), General Electric (NYSE: GE), Memorex, and Procter & Gamble (NYSE: PG) helps the company stay calm through short-term stock fluctuations.
"As we like to say, this isn't the first tournament for any of us," said Mr. Kessler. "The real question to ask is, Does this team have any good ideas? I think we're just starting to answer that." |
