Yankowski Says Palm Evolving Into Personal Network Devices

NEW YORK— Palm's product applications are evolving from their "grassroots handheld" origins "into personal network assistants," said Palm CEO Carl Yankowski in his opening keynote speech at PC Expo earlier this month.

"They will evolve into elegant network solutions," he said. "And it's clear that handhelds will play a critical role in the so-called 'next wave' of the Internet." Instead of selling personal organizers Palm will start promoting "personal network devices" that will have greater value because of their interoperability with other products and with enterprise systems. He made no specific mention of new product launches or operating system upgrades.

Yankowski also stayed away from talk of Palm's financial health since the company was releasing its numbers to Wall Street later in the evening but he did say that "in the marketplace, our brand is still fairly robust." [Palm reported revenue of $165.3 million for its fourth quarter ended June 1. Pro forma operating loss was $153.6 million for the fourth quarter of fiscal 2001.]

"We realize there are things we could have done better but many of the problems were market-wide," he said. "Of course, it is certainly fair for us to be scrutinized but we're heading in a good direction. The Palm economy is vibrant and growing — and committed."

The thrust of Yankowski's comments was directed toward encouraging, and exploring, what he said he sees as the next great opportunity for handhelds — and for Palm specifically — and that is the enterprise market.

While it was clear that Palm and Yankowski know the company's current success relies on the popular consumer perception of its handhelds and the third party devices made using the Palm OS, the future success depends upon Palm's ability to serve the medical, the supply-chain and logistical, and the education markets. And he said that research supports this new direction, citing an IDC report that predicts 50 percent of all handhelds sold worldwide will be "supplemented by companies."

The future for consumer interests and the interests of CE retailers will likely be in the compatible products offered up as modules for Palm handhelds or as Secure Digital media card compatible devices that can share different kinds of information with one of the handhelds. To illustrate this, Yankowski invited Panasonic Chief Technology Officer Paul Liao to join him at the keynote podium with one of Panasonic's SD compatible digital cameras. Liao took Yankowski's picture, removed the SD card from the camera, inserted it into his own Palm handheld and within seconds showed off the image.

"The flexibility between SD devices and handhelds will drive (consumer) interest," Liao said.

And Yankowski was not timid with this projection: "This has the potential to do for handhelds what CD-RW has done for PCs."

Memory transfer and overall capacity will also drive Palm Inc.'s efforts, according to Yankowski. "While wireless access is an important part of our strategy, that's not the whole story," he said. "Memory capacity is actually growing much faster than wireless bandwidth." SD will play an increasingly important role, he said, in how Palm promotes its products. SD will allow enterprises to store entire catalogs, manuals, directories and registries.

"The most important part of the 'Palm Economy' is the applications," he said. "You'll see a merging of voice and data, a merging of functionality.

"It'll be more and more important to have data — and that's where our future is."