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Palm: Size Matters

By Brian P. Watson  |  Posted 2006-05-05 Print this article Print

Palm puts off some with the Treo 700w's teeny-tiny screen, while others say its newer handhelds provide superior battery life and are easier to use.

Like Research in Motion, Palm won customer loyalty with its earliest innovation: the Palm Pilot, an easy-to-use handheld organizer. But as wireless technology grew up, so did the demands of Palm's customers.

Some applaud Palm for improving on growing pains, like making its keyboard easier to use. But others say hulking competitors like Hewlett-Packard—and the small screens of Palm's Treo devices—are loosening the company's grip on their loyalty.

Doctors at St. Vincent's Medical Center, a Bridgeport, Conn., hospital, carry Palm Treos loaded with software that helps them access patient records and treatment databases. But for Gary Weiner, the hospital's chief information officer, the Treo's screen size is a "big drawback ... The real estate of the user interface is really difficult when you're designing applications."

Mike McCleery, vice president of technology with UnumProvident, agrees: "There's only so small you can go before you lose functionality." The Treo 700w's screen is 2.5 inches diagonally, compared with the 3-inch HP iPaq hw6500. In response, Joe Fabris, Palm's director of wireless markets, says the Treo screen size is in the "sweet spot" for readability while fitting on a phone-size device.

McCleery says making calls and typing on the Treo are easy, though he adds that the keyboard was poorly designed and harder to use in earlier devices. He also favors the Treo because it has a longer battery life—a full workday—than that of its competitors.

Kelleher Corp., a producer of lumber and moulding products in San Rafael, Calif., bought Treos as part of an order-management system overhaul in late 2003. Paul Herzog, vice president of marketing, says the Treo 650s featured a user-friendly interface and superior phone functionality.

Chris Fryer, director of information technology and communications with San Francisco law firm Hanson, Bridgett, Markus, Vlahos & Rudy, went with Treos because many of the firm's attorneys were accustomed to using Palm Pilots.

He likes the smaller screen and says the device has a faster processor than some competing products. However, according to Fryer, Treo 600 and 650 models—which run the Palm OS operating system—sometimes don't display document attachments. (Palm says document-viewing software from DataViz is preinstalled on the 650 and 700 models.) Overall, Fryer says he's satisfied with the Treo, but is keeping his options open: "They're good—they're not the best, but they're good."

Handheld Computing


950 W. Maude Ave.

Sunnyvale, CA 94085

(408) 617-7100




Ed Colligan

President & CEO

Joined in 2003, when Palm acquired Handspring, the rival company where he was president and COO. Previously served as president and general manager of Palm's Wireless Business Unit.

Jeff Hawkins


Founded Handspring with Palm colleague Donna Dubinsky in 1998. He invented the first Palm Pilot in 1994.

Key Product

Treo 700w handheld provides voice, e-mail, short-text message and multimedia messaging communications; it runs on Microsoft's Windows Mobile operating system.

Reference Checks

Hanson, Bridgett, Markus, Vlahos & Rudy

Chris Fryer

Dir., I.T. & Communications


Project: About 150 attorneys from San Francisco law firm carry Palm Treo smart phones for phone, e-mail and document access.


Mike McCleery

VP, Technology

(423) 287-2728

Project: Disability insurance provider uses Palm Treos with messaging software from Good Technology to let 1,000 sales and support staff access customer data.

Medstar Health

Dr. Sameer Bade

Chief Medical Technology Officer


Project: Hospital system deployed Palm Treos to give medical professionals access to homegrown as well as public health and medication databases.

St. Vincent's Medical Center

Gary Weiner



Project: Executives at 397-bed hospital in Bridgeport, Conn., use Palm Treos for wireless phone and e-mail; doctors use them to access patient records.

Kelleher Corp.

Paul Herzog

VP, Marketing


Project: Workers at the San Rafael, Calif.-based manufacturer and distributor of lumber and moulding products handle order processing and inventory checks on Palm Treo 650s.

Schwan Food Co.

Mike Booke

Sr. Dir., Business Information Systems


Executives listed here are all users of Palm's products. Their willingness to talk has been confirmed by Baseline.

Palm Operating Results*
2006FYTD 2005FY 2004FY
Revenue $1.18B $1.27B $949.65M
Gross margin 31.6% 30.8% 28.7%
Operating income/loss $81.87M $77.53M -$4.08M
Net income/loss $309.01M $66.39M -$21.85M
Net margin 26.3% 5.2% -2.3%
Earnings per share $2.95 $1.29 -$0.55
R&D expenditure $98.26M $89.80M $69.37M
Sales and marketing $152.77M $170.89M $152.07M
*Fiscal Year Ends in Late May or Early June; Fytd Represents Nine Months Ended Feb. 28, 2006

Other Financials**

Total assets - $1.41B

Stockholders' equity - $937.50M

Cash and equivalents - $131.64M

Short-term investments - $404.63M

Long-term debt - None

Shares outstanding - 102.07M

Market value, 4/20 - $2.35B

** As of Feb. 28, 2006, Except as Noted

Associate Editor

Brian joined Baseline in March 2006. In addition to previous stints at Inter@ctive Week and The Net Economy, he's written for The News-Press in Fort Myers, Fla., as well as The Sunday Tribune in Dublin, Ireland. Brian has a B.A. from Bucknell University and a master's degree from Northwestern University's Medill School of Journalism.

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