The (Corporate) Windows Treo and the Mobile Platform Wars

Yesterday saw a a moment that many mobile device fans would have deemed unthinkable just a few years ago when Palm and Microsoft jointly announced a Windows Mobile powered Treo. Rafe looks through first the impact on Palm's corporate strategy, before looking at the wider implications for the  mobile platform war.

The Corporate Market and Exchange

It is clear that a Windows Mobile powered Treo is aimed at the corporate market. The key benefits outlined were the ability to take corporate information (such as e-mail, contacts, agenda) on the road and link back to the office via Exchange. The corporate market is something Palm has often targeted, but failed to make any serious in roads into. With a Windows Mobile Treo that is likely to change. It might even be arguable that the switch to Windows Mobile was driven by this. Palm recognising that Exchange compatibility was a must to get a piece of the corporate market looked for solutions and decided that the only viable solution was to license Windows Mobile (Palm OS in its current form just not being good enough to support an Exchange natively). However as a strategy to lead the future of the company is seems risky. Microsoft has happily licensed the Exchange technology to other mobile device providers in an attempt to compete further with Blackberry and reaffirm the dominance of Exchange as the corporate PIM server. It is not going to be long before we see other devices from the like of Nokia incorporating Exchange sync technology. The potential differentiator that manufacturers see in providing Exchange compatibility will soon become common place.

Push E-mail

Blackberry have clearly demonstrated the importance that push email is playing in corporate thinking. Push email is the other side of the coin that is Exchange compatibility. Crucially a third company, Visto (whose history dates back to the Psion Transcend software), controls many of the patents in this area. The delays in Microsoft's push email solutions are almost certainly down to the thorny issue of licensing and patents in this area. The importance here is that push email is unlikely to remain a differentiator for much longer. It is just a matter of time before solutions become available. Already Visto has been licensing its technology to the likes of Vodaphone and other operators. The Visto solution is technically the most impressive, and more importantly does not favour one OS over another. Similarly Blackberry Connect has being making its way on to ever increasing number of devices (the latest of which, after some delays is the Nokia 9300/9500). Blackberry's success is almost entirely down to it lead and innovation in this area. I am sure they will keep a close eye of developments.

So can Palm crack the corporate market? Yes if it moves quickly. It must, however, accept it is now one of many players. It can not afford to make mistakes or it will be left behind. It is also difficult to see how it will avoid becoming just another Microsoft Mobile device manufacturer. The contrast between Microsoft's software branding led strategy and Symbian's manufacturer led branding strategy could not be more clear.

The Treo on a modern OS and the fate of Palm

Technically the Treo has always been a little behind it's competitors, such as Pocket PC Phone Edition devices and UIQ devices principally as a result of utilizing the Palm OS. However despite this the Treo has largely outsold its Windows Mobile equivalent. This is because the Treo is an incredibly strong brand, has a much praised design, and the arguable the Palm OS look and ease of use. Interestingly UIQ devices (principally Sony Ericsson P series devices) have matched or exceeded the sales figures over the same period. The success of Symbian UIQ in this pdaphone segment has largely got unnoticed in the US where Symbian and UIQ lack the market share they have in Europe.

With the move to Windows Mobile 5 the Treo is able to catch up - it is finally on a multi tasking OS that has been designed for use as a phone from early on, not as an after thought. The Treo design remains, but what of the Palm OS look and feel? Palm were keen to stress in the press conference that they were bringing the Palm experience to Windows Mobile, but that is a real stretch.

There are certain customisations that Palm will be able to do, but fundamentally Windows Mobile is a different look and feel. The impact of the on the user experience should not be under-estimated. Design and branding can only take you so far, and an advantage in that area does not last long. For users there are going to be other hardware options available running the same software (such as HP's Mobile Messenger device). Palm will be facing a lot more competition. While I am sure the value of the Treo name will last for a few product generations I do not think it will remain something special. Other companies will imitate the design, or come up with something better. Palm, at least on Windows Mobile, will be left as little more than one of a collection of companies designing and marketing hardware for Microsoft. It's a sad state of affairs for a company that once ruled the mobile device sector and I am reminded that another early pioneer on the mobile device market, Psion, is now a little known Microsoft OEM.

Mobile Platform Wars

I do not think the Palm OS will disappear, but I do expect to see it gradually diminish in importance, and certainly I do not see it as a long term contender in the connected device marketplace. Instead I think it will remain a mainstay of Palm's PDAs for at least a few years. However what it does mean is that Palm OS is largely no longer a contender in the mobile platform wars.

During the press conference Colligan was asked whether they would look at other OS's such as Linux and Symbian. There was a shake of the head and the answer was no - it would be too complex to use multiple operating systems. However I still do not think a Symbian powered Treo can be ruled out. If the operators ask for it they will get it.  It does seems clear, however, that the pdaphone market will be Windows Mobile 5 (Pocket PC / Phone) versus Symbian with UIQ and Linux as a bit of a dark horse. This is something of a mirror of the smartphone battleground which is shaping up between Symbian with Series 60 and Windows Mobile 5 (smartphone), with Linux emerging as third force. Interestingly while Symbian and Series 60 have a commanding lead in the latter (as high as 80% market share), the pdaphone marketshare is split roughly equally three ways (UIQ / Palm OS / Windows Mobile). With Palm licensing Windows Mobile there is potential for a shift. All parties will be closely watching Sony Ericsson in the coming weeks who are set to announce their next generation P-series phones running on UIQ 3.

The issue of marketshare is an interesting one. In device numbers Symbain are dominant (63% market share of mobile device market [PDAs and connected mobile devices]). However few people in the general public are aware of Symbian, where as many will have heard of Palm or Microsoft's Mobile efforts. There is a lack of Symbian awareness and coverage in the mainstream press comparative to the number of Symbian devices in the wild (40 million or more).

Of course part of this is that smartphones garner less attention than high end pdaphones like the Treo. As a result high end users, and to an extent press and analysts become a bit blind to the significance of smartphone numbers. The reality is that pdaphones, such as the Treo, are going to be small portion of the smart connected device pie and in one sense are not really that relevant to the overall position of the market. Part of the reason Symbian does not receive the attention its market share would seem to deserve is that it dominates in the phone led smartphone space.

Furthermore many pdaphone adherents dismiss phone led smartphones because they are not powerful or featured enough, but that is a view maintained largely through ignorance. Devices such as the Nokia 6680 allow similar levels of functionality, but are phone rather than data/pda led. As a result many people buy these devices primarily as a phone (because it is a Nokia) with the additional functionality being a bonus. By contrast pdaphones are bought because PDA/data functionality comes first, and the phone comes second. Such devices are understandably very popular for bringing connectivity to the PDA, but the truth is most people do not need or want this level of sophistication. As an aside the reason for the Treo's success it that it has done one of the best jobs in marrying a PDA with a phone.

As I mentioned earlier there is something of a strategy difference between Microsoft and Symbian with regards to marketing. This is partly dictated by their situations. Symbian's position is dictated by it's shareholders (Nokia, and Sony Ericsson being the most important here) and the desires and needs of its many licensees (Motorola and Fujitsu being important here). They want to have their own brands as the key marketing element. As a result the majority of Symbian OS devices owners probably do not realise they have a Symbian OS device.

Microsoft by contrast has a software led strategy with the 'powered by Windows' being a core part of the positioning and marketing of the product. In contrast to Symbian device owners almost every Windows Mobile device owner will know exactly which company powers the OS of their device, but may perhaps be unaware of the manufacturer (especially with the operator branded phones). The vast majority of Windows Mobile devices (and incidentally the Treo devices) are made by HTC.

Microsoft strategy has always been something of an Achilles heel - putting off the larger device manufacturers who fear becoming beholden to Microsoft. While the HTC produced devices were weak at first (Canary, Tanager, Voyager, Wallaby), more recent devices (Typhoon, Amadeus) have shown promise, but seem to have been held back by the lack of branding. Indeed many Microsoft fans argue that Symbian's smartphone dominance is entirely down to the fact people 'always want the latest Nokia'. While the reality is more complicated it does show the importance of brand.

That is why the Palm - Microsoft link up is significant. Along with Motorola they now have two very well known brands with which to gain traction in the market place.

Phone led smartphone vs data led smartphones

I have made a distinction between PDA phones and smartphones, but the distinction is not clear cut in design terms. There is a continuum line linking the two types on which all devices fall. Palm aggressively market the Treo as a smartphone not a PDA phone. It is perhaps more informative to see the difference between phone led smartphones (phone-smartphones) such as the Nokia's Series 60 powered phones and perhaps even the UIQ smartphones, and data led smartphone (or data-smartphones) such as the Palm Treo and to an extent Windows Mobile powered phones in general. There seems to be difference in the usage, software and design paradigms between the phone-smartphone and the data-smartphone. It is perhaps possible to argue that Symbian with Series 60 falls on the phone-smartphone side and Windows Mobile on the data-smartphone side. I also think you can trace this difference between Europe (and the rest of the world) versus the US, but the geographical differences and the phone-smartphone vs data-smartphone difference are best addressed in a later article.

Published by Rafe Blandford at 12:30 UTC, September 27th

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