2001: The Year in Review

While it's often easy to get lost in the daily flow of Palm-related news, the end of a year is always a good opportunity to look back and try to get some perspective. News Editor Ed Hardy brings us a chronological retrospective of the year's top stories and trends.

2001: The Year in Review
By Ed Hardy
12/31/2001

As always, the year started off with a bang because the Consumer Electronics Show is always in early January. The high point was probably Palm showing off mock-ups of possible future SD peripherals. These generated a great deal of interested even though the first Palm handheld with an SD slot was still months away. Even almost a year later, though, none of these have been released.

February was full of rumors of upcoming new handhelds. Palm execs had already said a color replacement for the Vx was on the way, which we now know as the m505, and CEO Carl Yankowski said they would have a wireless replacement for the Palm VIIx out before the middle of the year that would be better than the RIM Blackberry. Sadly, Palm has yet to release this model. TRG changed its name to HandEra and started hinting about a replacement for the TRGpro.

March was an absolute flurry of new handhelds. In just a few weeks, the Palm m105, the Visor Edge, the Palm m500 series, and the Kyocera Smartphone were all announced.

The Palm m105 was just a super-charged version of the low-end m100. The Edge had a monochrome screen and was the thinnest model Handspring had ever released. It required a clip-on sled to use Springboards.

The m500 series was the first from Palm to include an SD slot. It was made up of a color and monochrome model. The Kyocera Smartphone, while not the first to combine a mobile phone and a Palm OS handheld, was the first to do it well.

Though these were announced with much hope from their respective manufacturers, the Edge and the m500 series didn't turn out at all like Handspring or Palm had hoped.

Over the next few months, the Edge proved to be a sales disappointment. Handspring had misjudged the timing and most buyers were no longer interested in a high-end monochrome handheld. Handspring has steadily dropped the price of the Edge from $400 to $250 and in August Handspring's COO admitted that leaving color out was a mistake.

Palm, nervous that Handspring's announcement of the Edge made it look like it was falling behind, announced the m500 series months before it was actually available. This just about killed demand for Palm's current high-end model, the Vx.

To make matters worse, even bigger problems were brewing behind the scenes. What no one but the people at Palm itself knew was that demand for handhelds had dropped off as the U.S. economy slipped towards a recession. As if that weren't bad enough, Palm, assuming that demand would never slow, had committed itself to buying large numbers of parts from suppliers. So the company was left with a huge glut of handhelds it couldn't sell. It announced its last profitable quarter for the year during this month.

In April, HandEra announced the HandEra 330, the first Palm OS model to offer a screen larger than 160 by 160 and a soft Graffiti area. It also included dual expansion card slots. The month was also marked by user's mounting impatience over the m500 series delay and hints of something new from Sony. Palm began cutting jobs and dropping prices in an attempt to spur demand.

In May, Sony officially announced the first model of its much-improved Clié series, the PEG-N710C which featured a hi-res screen and a built-in MP3 player. It began to appear in stores a few weeks later.

The HandEra 330 was also starting to be available and even the m500 and m505 finally began to be in customer's hands in significant numbers, setting off a long-running argument over the quality of the m505's screen. Despite this criticism, Palm sales rebounded this month accounting for about 70% of retail sales, led by the m505. Nevertheless, the long delay had hurt. Palm announced a large loss for the previous quarter.

The next month, Sony took a big move to fill out its product line by announcing the PEG-N610C and PEG-S320. The N610C was essentially the same as the N710C without the MP3 playback and at a lower cost, while the S320 was a low-end model without the high-res screen but it did have a Memory Stick slot.

Other than that, June was a fairly quiet month, marked mostly by releases of accessories for the new handhelds.

The top news for July was Palm's announcement that OS 5, the next generation of its operating system, would be able to run on chips from multiple suppliers, including Intel, Motorola, and Texas Instruments, freeing the Palm OS from its long dependence on the the Dragonball chip. Still, this was a long-term announcement. No OS 5 handhelds are expected on the market until the second half of 2002.

Palm also announced that it was going to split itself into two parts, one that created hardware, the other software. This was intended to reduce friction with the Palm OS licensees, who resented the close ties between the people at Palm who create the OS and those who create Palm's hardware. The licensees believe that gave Palm's own handhelds an unfair advantage. This process should already be complete.

August saw Palm's announcement that it was buying Be Inc's intellectual property. Later it announced it was hiring many of Be's employees to assist in making OS 5. It still isn't known exactly how much effect these people will have on the operating system, though they are expected to improve its multi-media and Internet capabilities.

The FCC accidentally outed some new wireless handhelds that hadn't been announced. Handspring received permission to release the first two of the Treo line, which are very small wireless models with both voice and data capabilities. They are quite a departure of previous Handspring models; both lack Springboard slots and one of them doesn't even use Graffiti. These have since been formally announced and should be available in January. At this point, expectations are running high for these and there seems to be a great deal of demand.

Also, Palm received FCC permission to release the i705, a wireless model with data-capabilities only. Palm hoped to have this model out this year but said later that it would be delayed until 2002 and has yet to formally announce it.

The whole summer saw price wars developing in both handhelds and memory cards. Palm and Handspring kept lowering prices to increase demand, which appears to have worked fairly well, though this has cut into profits for both. Sony followed suit, though to a lesser extent. However, Sony was very involved in the other war. It and Panasonic/Matsushita did tit-for-tat price drops on Memory Sticks and SD cards, respectively.

September, of course, will always be remembered for the terrorist attacks in New York and Washington DC. Nevertheless, the world didn't end, though it seemed like it would for a while there.

Samsung introduced the I300 smartphone, which had a color screen and both voice and data capabilities. The market for smartphones was beginning to look a touch crowded, though some analysts are predicting that, in the future, all handhelds will be smartphones.

Handspring refreshed its line by introducing the Visor Neo and Pro. The Pro was a mid-range model and the first ever to ship with 16 MB of RAM. The Neo was a low-end model with an updated OS. Both were monochrome.

Palm introduced the m125, a mid-range handheld that looked much like Palm's low-end m100 series but had an SD/MMC slot. It also released financial results showing that while the company was showing signs of recovery, it still had a ways to go.

Sony announced the PEG-N760C, which was essentially a N710C except with an updated OS. This allowed its screen to display 65 thousand colors, which the N710C's could not.

In October, Sony introduced the PEG-T415, a mid-range super-slim monochrome model with a hi-res screen. Interest was high, despite some criticism that its screen was too dark. It also introduced the first non-memory Memory Stick, a digital camera module. Neither were actually available until the following month.

The top story from November was the abrupt resignation of Palm's CEO Carl Yankowski. While his departure was supposedly voluntary, he had been blamed for many of Palm's problems, including the slow pace of innovation in the company's products. Palm still hasn't announced a permanent replacement for him. Since then, David Nagel, head of the group that is creating OS 5, has given numerous interviews promising to pick up the pace in innovation.

December is usually about shopping and, though final results aren't in, this appears to have been a fairly good holiday season for handhelds, though the recession kept many of the sales near the low-end.

Palm announced its third unprofitable quarter in a row. However, company execs also said they hope to have it profitable again by June. In a story that is still developing, Palm lost a patent lawsuit over Graffiti. Handspring, which has never posted a profit, also hopes for profitability by that same time, going mostly on hopes that the Treo line will be a big hit.

As for what's ahead in 2002, the beginning of the year will be marked by the release of several wireless models from Palm and Handspring. Non-wireless won't be ignored, as Sony introduces the T615 and Palm possibly puts out an upgraded version of the m505. The second half will be dominated by expectation of the next generation of handhelds running Palm OS 5 on much more powerful ARM-based chips.

2001: The Year in Review http://www.palminfocenter.com/news/2768/2001-the-year-in-review/

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