PalmSource Looks To China Market For Help
Hit hard by the Sony announcement that it would not introduce
new personal digital assistant (PDA) models this year,
PalmSource, which licenses the Palm operating software
for PDAs and smartphones, announced that it was in discussions
with Ningbo Bird and TCL, two leading Chinese handset
makers, to license Palm software.
Sony's announcement that it was stopping the introduction
of new PDAs hit PalmSource
hard, with its shares falling 12% in one day in the US.
The Palm operating system for PDAs was largely responsible
for the growth of the PDA market in the late 90s and early
2000s. But now there are signs that consumers are warming
to smartphones, which are in fact mobile phones with strong
computing and Internet communications capabilities. For
consumers, the smartphone advantage is that they would
have one device to carry instead of two.
Palm currently makes only one smartphone model, made
by PalmOne,
the Treo 600, which sells for US$600. This model has proven
to be very popular in the US, but the company has been
unable to fulfill demand quickly enough because of component
shortages. The end result is that there have been serious
lost sales for Palm.
China has the world's largest single market for mobile
phones at 290 million, which means that the total number
of mobile subscribers is now larger than the total population
of the US. It is continuing to grow at a strong pace.
It is now the single most competitive market for handsets,
especially among the urban population, who consider the
mobile phone as a status symbol. As a percentage of the
total population though, the number of Chinese who change
mobile phones 3-4 times a year is still comparatively
small, but their influence as fashion and trend leaders
far outweighs their numbers. For this reason, virtually
all of the handset makers launch their newest models in
the China market first, then launching in Europe, with
the North American market last.
High prices have affected the takeoff of the smartphone
market in China, and all over the world. But, there are
early signs that the intense price competition which has
affected basic mobile phones will work its way into the
smartphone market in China, because of intense market
share competition from Nokia, Motorola, TCL and Bird on
the handset market side, and Symbian, Microsoft and Palm
on the operating system side.
Symbian has the backing of the leading European companies,
and Microsoft has the support of Motorola. Right now,
Palm is the odd man out.
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