Palm’s future in the smartphone market remains uncertain, but its technology could prove valuable to Research in Motion, makers of the popular BlackBerry smartphones – especially as Research in Motion (RIM) continues its consumer push.
Reading David Coursey’s InfoWorld post “Palm is doomed; let the good-byes begin”, I couldn’t help but wonder “what next for Palm?” As Coursey and the Wall Street Journal mention, Palm has released strong products since re-launching on the WebOS platform and enjoys excellent carrier support. Yet, this hasn’t helped Palm’s share grow:
“In the nicest way possible, it (the Wall Street Journal) says Palm, with a mere 0.7 percent of the smartphone market, compared to 14.4 percent for Apple and 20 percent for RIM, simply can’t catch up.”
Being acquired by RIM is definitely one answer to the “what next for Palm” question. There is however the slight issue of Palm’s $1 billion market cap putting a serious dent in RIM’s $1.3 billion cash and near cash position. However, RIM doesn’t have any debt, so there’s room to finance the acquisition. RIM’s stock, while not priced where it’s used to being, remains on most investor’s tech stock short list, and could help fund the acquisition. For our purposes let’s assume RIM could close the deal.
The larger question is “Why would RIM want to acquire Palm?”
The 0.7 percent market share of Palm isn’t reason enough to acquire Palm. RIM could get its share of that 0.7 percent as Palm users look for future devices from Apple, RIM or Android phone manufacturers.
One reason to acquire Palm would be to leverage Palm’s open source experience. I’ve argued that RIM could benefit from using open source more effectively in its business. Palm would jumpstart this effort.
The more compelling reason to acquire Palm would be Palm’s WebOS platform. The BlackBerry platform, built on the aging BlackBerry OS, is in serious need of a refresh. This is less the case for enterprise BlackBerry users, many of whom couldn’t function without the email and messaging capabilities that the BlackBerry excels at. The user interface and rich interactivity of BlackBerry applications are secondary to the mail and messaging requirements. This will change over time as more businesses expose enterprise applications to mobile devices. For instance, the fact that a company’s CRM application is more usable on an iPhone or Android versus a BlackBerry may well entice an enterprise user to migrate off their BlackBerry. A revamped OS would resonate a lot more with younger consumers deciding between an iPhone or a BlackBerry Curve. The fact that one’s friends are on BlackBerry Messenger (BBM) is reason enough to leave behind 100,000 plus iPhone apps for the ability to communicate with tens or hundreds of ones (closest?) friends on BBM. BBM is an instant messaging platform available to BlackBerry device users. Giving these consumers users a richer, more fun, user experience would go a long way towards keeping these BlackBerry users happy in the face of iPhone toting friends.
The user experience would be vastly different between a WebOS-based BlackBerry and a BlackBerry OS-based BlackBerry. But this would be a point in time statement and one that retains and attracts both enterprise and consumer users. For a consumer the WebOS-based BlackBerry lineup, especially if new RIM designed devices are released in addition to the existing Palm devices, would be a much more compelling user experience than what’s available through the current BlackBerry OS-delivered user interface. For the enterprise user, the addition of a WebOS-based BlackBerry line, along with RIM’s commitment to bring the user experience to all BlackBerry’s would be a reason to remain a BlackBerry user until the new interface arrives on BlackBerry’s enterprise-targeted product line. Waiting for coveted features on a product or platform you’ve already invested time and money in is not uncommon in the IT market. For instance, as terrible as the BlackBerry browser is, many BlackBerry users are waiting at the edge of their seats for a new WebKit-based browser rather than jumping ship to an iPhone or Android device. Early iPhone users lacking copy and paste capabilities are another example.
There’s also an issue of existing BlackBerry applications running on WebOS-based devices. Maybe a stripped down BlackBerry OS could run in a virtual machine on the mobile device? I’m sure RIM’s engineers could come up with some creative solutions.
As a BlackBerry user, I’d love to get the WebOS user experience in addition to the email and messaging capabilities of a BlackBerry.
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PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”