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HP/Palm's Rubinstein believes in integration

In other words, to differentiate and succeed in the mobile device space, you need to own a veritically integrated stack strategy — software, hardware and services — like the one Palm is now building out with the help of HP’s not inconsiderable resources

via Palm Chief: By Birthright, Palm Should Have Owned the Smartphone Market | John Paczkowski | Digital Daily | AllThingsD.

I would not write Palm/HP off in this market.

  • Alexkhan2000

    I had just posted a link to this on the article "Is the smartphone a commodity?" and I see that you saw it too at around the same time. This trend shows that this post-PC mobile market will not be anything like the PC market and that comparing the iOS vs. Android to Mac vs. Windows is a futile exercise. HP clearly saw that Android was not the right direction for them. It'll be interesting to see if Samsung puts more resources behind Bada in the future. Samsung is another company with "not inconsiderable" resources.

  • http://twitter.com/TektonikShift @TektonikShift

    Its fair to say we are in early stages of the smartphone wars.

    Whats interesting and different this time from other industrial battles (ex PCs ala 1970 – 1980)??
    None of the companies gearing for battle are small upstarts.
    Nokia, Rimm, HP, Google, Apple and MS are all substantial in size and/or scope.

    -Tek

  • Alexkhan2000

    When comparing to the PC market in its nascent stages, I guess the question becomes: is the software (apps) as important to the smartphone as it was for the PC in this era of the Internet and when it's now mainly about voice communications and accessing content?

    • dchu220

      I would say yes. I would also say that we haven't seen the killer 'app' yet.

      Mobile software is still really immature. A program like iMovie took Apple 18 months to develop. There are not a lot developers who have the resources to do it themselves.

      I think the future of the Internet is for the Internet to become invisible. Software will connect when it is more efficient. Could be bad news for Google..

      • http://twitter.com/TektonikShift @TektonikShift

        Yup, the current trends towards information silos (Facebook, mobile Apps ) is not good for Google.

        Google wants content to be a free commodity. Facebook data is out of reach Google crawlers. Apple and others are enabling efficient payment systems.
        If this trend continues, large parts of the online experience will remain out of reach of Google's Ad business.
        -Tek

      • Alexkhan2000

        I agree as well that we haven't seen the killer mobile apps yet. But would they be as platform dependent as, say, the Lotus 1-2-3 and WordPerfect were to DOS (and later Excel and Word in Windows) in the PC market? If a developer(s) comes up with a killer app(s), they wouldn't lock it into one platform anyway. They will try to cover as many platforms as possible and even the platform providers will do what they can to make sure such apps become available on their platforms.

        It would seem that all these different platform/ecosystem providers (Apple, Google, Microsoft, Nokia, RIM, and HP) can co-exist and survive in the current paradigm. As Horace has pointed out in past articles, the integrated model has not lost any steam at all against the modular model despite all the hype about Android gaining gobs of smartphone market share.

        It seems the focus of the integrated players is differentiation, of which Apple leads the pack but more so in mindshare than actual market share when one factors in Nokia. I don't think we can count out RIM either although it's become very fashionable for analysts and industry followers to predict their impending doom. HP is still the largest technology company in the world (unless Samsung passes them in the next year) with over $130 billion in annual revenue, so they're in this for the long haul and quite committed to their own integrated model – eschewing both Android and WP7.

      • Marcos El Malo

        I'm not even sure what "killer app" means any more. Sure, in the late 70s and 80s, when micro-computing was just gaining acceptance in business, there needed to be a "killer app" (KA)to justify purchases of the hardware. So you had KAs like VisiCalc, WP, Lotus, Excel, and Word that sold the hardware. A little bit later, you had Mac + Postscript Laser printer = Desktop Publishing as an example of a KA.

        But now we've subtly shifted the meaning of the app in Killer App from meaning an application or program to the application of the technology to solve a problem. Email was the internet's first killer app. Search was the killer app that put Google where it is today.

        Some have argued that the iTunes App Store is the killer app for Apple. Others say it is the iOS user interface.

        I'm not trying to give you a hard time. It's just that the phrase has been used in various ways, and I no longer know what precise meaning it has. (I also wonder if the killer app for smartphones isn't actually voice communication!)

      • dchu220

        I feel the same way about the phrase, "creating value for share holders."

      • dchu220

        Perhaps platform dependence is not the key this time around. Perhaps it is platform management.

        The platforms that make it easiest for developers to develop/maintain/distribute may be the ones that win out. They will get priority when it comes to a companies' resources.

  • Alexkhan2000

    And Nokia will continue its go-it-alone strategy as well.

    http://online.wsj.com/article/SB10001424052748703

    At the end of the article, an analyst says that the Android ecosystem will be even "bigger" than Apple's. What does a "bigger" ecosystem really mean in this context? Mere number of phone activations? How about the tablets or something like the iPod touch? Number of apps available? More content? How about the *quality* of the ecosystem?

    • Marcos El Malo

      Is it even accurate to talk about a single Android ecosystem, as OEMs, carriers, and others continue to adopt Android and shape it to their needs. Can a fragmenting platform even have a unifying ecosystem? I suppose it's possible, but even if it is desirable to users, is it desirable to the device makers, the carriers, and Google?

      • Alexkhan2000

        Exactly. The term "ecosystem" is quickly becoming an oxymoron for Android. Why would HP/Palm, Nokia, and RIM want to be part of such chaos? Heck, even the Windows PC industry under the hegemony of Microsoft seems like a very clean and organized world compared to what's going with the Android platform. I'd be willing to bet that there are some in Google pondering, "What the hell have we done here with Android? Is *this* really what we wanted?"

      • Marcos El Malo

        One other thought about the WSJ article to which you linked: The view often propounded here on asymco, that adoption of Android is a desperation move and joining a race to the bottom, seems to be taking hold elsewhere, judging by that article. I don't know if Nokia will succeed with their Symbian/Meego/Qt plan, but choosing Android at this point would be throwing in the towel and not even trying. Nokia obviously feels they aren't that desperate yet. And they can always use Android if they get to that point.

      • http://twitter.com/Niilolainen @Niilolainen

        Yes. That's a really interesting question for me. WTF does Google think it's doing with Android long term? Reducing barriers to entry in smartphones and forcing commoditization?

        If this was a fully proprietary OS this might be a good idea, but with open source they can't stop OEMs and carriers customizing and forking the thing. End result; mega-fragmentation, lots of white-label products (and web services!) with carrier branding.

      • asymco

        This question is very, very interesting. If you think about Android, what is the plan long term? If Android "wins" what is the outcome? Let's assume that it gets 80% share and the world is awash with 3 billion Android phones. They will all be roughly the same and be cheap and not all that polished. But they will let you browse and get email and play Angry Birds.

        Then what?

        Is Google going to use this new-found platform hegemony to invent something new? Will they play the "Google Labs" game of putting out toy apps and services? I don't think so. The phones of 2015 will be roughly functionally equivalent to the phones of 2010.

        But what incentives are there to redefine the device or mobile computing? Android cannot move forward without someone to rebuild the market around a different profit model. And once you have 3 billion installed base it's hard to migrate them all without breaking the use cases which people come to depend on.

        Like someone said of Microsoft: if Apple did not exist, Microsoft would have to invent it.

        This all happened before with Windows Mobile. The vision of a device and interface of 2002 was swept aside even though every OEM licensed the OS and Microsoft was pronounced the disruptive winner by 2005. This market resists freezing the definition of what performance really means.

      • asymco

        Power is nothing without control.

  • Iphoned

    Whatever Palm comes upmwith, Google will just copy it in the Android and supply for free to their army of hardware drones who are willing to play margin-destroying platform marketshare game on behalf of Google.

    Unfortunately for Apple, they have allowed Android to get the foothold in the smartphone business. Note that with the iPad, Apple is playing a blocking game they should have played with the iPhone. (or more likely, the circumstances did not allow them to play that game. And now it is too late.)

    • Perspective

      Foothold? Do you mean the OEMs that aren't making money, the fragmented OS with carriers doing bizarre things (Verizon replacing Google with Bing), and the fact that Apple's daily profit from iOS was about 10x what Motorola made for the entire quarter?

    • Marcos El Malo

      Sure, Google can copy it, but if it's protected IP then there will be more lawsuits. Google will not protect the Android OEMs from these suits. HP/Palm might not seem to even be on the playing field yet, but Palm has surely developed a healthy patent portfolio in all the years it's been in the PDA and smartphone market. Now that it is part of HP (which has its own huge patent portfolio), surely it has the resources to pursue patent litigation when necessary.

      • http://www.notesark.com Iphoned

        Well, they copies Touch, admittedly the crown jewels, apparently with impunity. Certainly, lawsuits are not working on the timeframe to make a difference. There is nothing of substance they can’t similarly copy. And as they copyvto catch up they even may start inventing, thus turning the tables.

    • asymco

      If you think Apple is playing a blocking game with iPad you really don't understand how the company operates.

      • Iphoned

        Please enlighten with your understanding.

      • berult

        It pushes the potential boundaries of smart devices into a non-commody land of no commodity fall-back.
        And Google has to come along for the ride.

        Both altruistic and self-indulgent that caters for the "survival of the Fittest(s).

    • dchu220

      When you say blocking game, do you mean pricing a device so that it is difficult for your competitors to enter as well?

      The iPhone and iPad are two vastly different markets. The biggest thing in the phone market is that carriers control the market (not customers) and that they are competing against incumbents who have greater scale than anything you've seen in the PC market.

      In the tablet market, Apple has a lot of control. They are the only player in the 10-inch space with scale. Developers are creating a lot of apps just for this device. Distributors are tripping over themselves trying to get it into their stores. With greater control, a more aggressive strategy can be taken.

  • Kevin

    i think the biggest underlying theme is that mobile phones are a space where style matters. not just looks, but how functions operate. no one wants to be using an outdated software/hardware set, not only because of fashion, but because these are being integrated into daily workflows.

    it always amazed me that in the 90s and through today, people would buy a computer, tinker a bit, not get something to work, and just let it sit there until the next time they wanted to tinker with it. people aren't accepting that kind of shoddy software on their cellphones.

  • Alexkhan2000

    And now, RIM's co-CEO says apps are a "passing fad". Is he in denial?

    http://blogs.barrons.com/techtraderdaily/2010/11/

    Customers are tired of getting told by Apple what to think?

    • dchu220

      Maybe what he means is that HIS customers think apps are a passing fad.

      Part of the theory of Disruptive Innovation is that companies fail because they do what good companies do. They talk to their best customers and allocate resources according to what they say.

      Like Henry Ford once said, "If I asked my customers what they wanted, they would have said a faster horse."

    • 2sk21

      Until I got my iPhone 4 earlier this year, I did not really understand apps. Now that I have an iPhone and have had the opportunity to use apps, I eel that apps are an absolutely essential part of the picture. Until bandwidth increases to the point of delivering large apps and data in a fraction of a second, I don't see how apps can fail to be relevant.

    • asymco

      http://daringfireball.net/linked/2010/11/17/balsi

      "Everyone remembers that this was Apple’s story for third-party iPhone development back in 2007, right? And that the announcement was met with dead silence — no applause whatsoever — during the WWDC keynote? And that Cocoa developers were so itching to write truly native iPhone apps that they started doing so on their own, via jailbreaking, with no help, tools, or documentation from Apple? And that when Apple was ready to release a native SDK in early 2008, that response — from both developers and consumers — was overwhelming?"

      • sweeps

        Horace,
        This link doesn’t seem to work on my iPhone.

  • Russell

    Horace,

    Isn't HP/Palm more in a race against time instead of the other smartphone players? The "hypergrowth" market for this cycle (US and some other developed countries) perhaps has another 12 to 24 months before it begins to slow.

    Great post/discussion. I have been wondering about how they might do and the dynamics at this stage of the game.

    Russell

    • asymco

      You have to consider the backstory to these deals. Palm is not the first mobile OS platform that has been available for sale and HP was not the only bidder. The first platform for sale was the Palm spinoff PalmSource. They held the original PalmOS IP and were working on a follow-up. When PalmSource was up for sale, it was revealed that several bidders were present. We don't know for sure who but I would not be surprised if Motorola and HP weren't. (The acquirer turned out to be a Japanese mobile browser company).

      Fast forward to Palm last year and you have them in control of a new OS (WebOS). Now again, there are several bidders and the winner turns out to be HP.

      One thing stands out if you look at this game long term. All the major vendors are desperate to be in the game but they also know that without some "IP" or software assets, their participation is limited to a rapidly eroding distribution channel. The jostling for position has been going on for a decade and the stories are beginning to repeat themselves.

      And yet we are still nowhere near the end game. Let's not forget that 5 billion people are waiting to be served these new devices. And they will replace them every 2 years. That comes out to 2.5 billion smartphones shipping every year. The market may not saturate for another decade or even longer. This is a huge opportunity.

      • Russell

        Horace,

        Wow,wow, wow, i still have trouble wrapping my mind around this cycle and how it is different that all the previous ones: the mkt size, the frequency of device replacement, the globality of it. I see your latest post has a Morgan Stanley slide which made me recall a slide I've seen on Mary Meeker's presentation( Internet Trends) earlier this year on number of devices( ipads, home enter., games, cars, appliances, etc, etc), that are not smartphones. They see the number estimated as 10x the number of devices of the previous cycle.

        Still having a hard time digesting this from my point of view as an investor.

        thanks Horace

        Russell

        I

      • asymco

        The global aspect is another dimension that has not been fully understood. Unlike the previous waves of technology adoption (PCs and the Internet) they were rooted in the wealthiest countries first and slowly grew to other regions, not fully penetrating them even today.

        Mobile is different. It expanded globally faster than anything else. As a result, the vast bulk of usage is widely distributed, not concentrated. There is no reason to think that mobile broadband won't follow the same path. As a result, the smart devices will also proliferate much more rapidly.

        What this means most of all is that a monopoly platform is very hard to implement. There is a low switching cost and lot of intermediaries in the value chain that can sway end users.