The PALM PILOT Story — Crossing The Chasm & Business Strategy Lessons
In the early 1990s, a new product category called PDA gained traction among corporate executives.
Most of the companies who launched PDAs saw their device effectively as a handheld PC, capable of handling some of the office-related tasks of a corporate executive. Every basic PDA had an address book, notepad, and an application for appointments. A few PDAs offered many more applications like spreadsheets, word processors, financial management software, clock, calculator, and games.
The ability to transfer data to and fro from a handheld device to a desktop PC was also a significant factor in attracting business people to open up their minds and purses for the PDAs.
PDA Market Existed. But Brands Failed — In the 1990s, seeing the demand, several bigger brands launched their PDAs. Some highly anticipated entries into the PDA category vanished after creating a flutter. Several brands couldn’t even get time to register their names in users’ minds. A few lingered around for a long time but failed to create a dent in the market.
Brands like Apple Computer, Motorola, Compaq, Microsoft, and IBM struggled to crack the market. When devices from bigger companies faltered so badly, experts began to wonder whether handheld computers could ever be a viable mass-market product. However, one brand came and showed how to succeed in the PDA market. It was Palm Pilot. The new brand nailed the PDA category in a consumer’s mind and sustained it for more than a decade. By 1999, within three years of its launch, Palm controlled 70% of the PDA market, with an over 5 million user base. The brand became a cult phenomenon.
How did Palm succeed when other brands failed in the PDA category? What lessons could we learn?
Before understanding Palm’s success reasons, let’s look at some of the competitor products in the market at that time.
COMPETITOR PRODUCTS IN THE PDA MARKET
IBM’S SIMON PERSONAL COMMUNICATOR
In 1992, IBM entered the PDA segment with the introduction of Simon Personal Communicator. The device had several built-in programs — a calendar, to-do list, calculator, address book, appointment scheduler, world time clock, electronic note pad/sketch pad, and handwritten annotations. People also could send faxes and e-mails.
The Simon Personal Communicator was also the first PDA device to allow a user to make telephone calls(mobile calling). The early adopters who were technical enthusiasts loved the product. However, the consumer market(Early Majority) saw the device as complicated to use. Moreover, the device was a data gobbler. The carriers of that time had limited bandwidth to support the product. It severely affected the product performance. The programs and the data network drained the battery quickly. Customers had to charge the device every hour. So, the user experience suffered dramatically. And the final nail — The price of the entry-level product was $899.
By 1995, Simon Personal Communicator vanished from the market.
Though several brands, including IBM, had launched their devices, Apple was the one who popularised the PDA segment with the launch of its Newton MessagePad in 1993.
Apple promoted the device as one to help people stay in touch with friends & associates, organize their work/life, and capture ideas as they happen. Apple boasted about the product’s handwriting recognition feature in their marketing/promotional communications. The company sold more than 80,000 units in the first year. Then…. the sales dropped off rapidly.
Newton’s handwriting recognition did not work as expected. Unfortunately, that was the only way to input data for all applications. It became the butt of the jokes in TV shows. The poor handwriting recognition affected the user experience. People found it hard to use the product for frequent, essential functions. Newton also had limited memory. In addition to that, the product was priced in the range of $700 to $5000. Customers didn’t see value for money.
By 1997, Apple withdrew Newton from the market.
The growing demand for PDAs had attracted Microsoft. In 1996, the company introduced Windows CE v1.0 software to lure other PDA hardware manufacturers. A few brands like Casio Computer Company Ltd., Compaq Computer Corp., Hewlett-Packard Co., and Symbol Technologies Inc. used Windows OS in their PDAs. However, the OS had poor GUI, stability issues, synchronization problems, and limited applications/abilities. It also drained the battery. The devices were also bulkier in size. The company’s attempt to adapt the Windows desktop OS to a PDA device failed to meet the PDA users’ needs.
Microsoft also launched its PDA called Palm-size PC(PsPC). It also suffered from similar problems and failed to gain any traction.
In April 1993, AT&T introduced EO Communicator with much fanfare. The idea of a portable device for an on-the-go business executive that could make calls, send/receive faxes & e-mails attracted people’s attention at that time. EO Communicator received wide publicity. The company also promoted the device as the first tablet computer with wireless connectivity via a cellular phone. The product’s PenPoint OS was also the talk of the town. However, the product failed miserably in the market.
The Problems with EO Communicator —
- Like Apple’s Newton, EO’s critical selling feature “Handwriting Recognition” brought its downfall. The OS couldn’t recognize characters. Users found it clumsy and impractical to use.
- The device was too slow as it had several applications. The processors at that time couldn’t support it.
- The product was bulky(the first device weighed around 4–5 pounds and the size — 7x11x1 inches(size of a notepad)).
- The PDA was also very expensive. The price of an entry-level device was around 3000$, which also included a cellular add-on accessory.
- The EO product’s mobile calling feature also became its weakness — By the mid-1990s, a mobile phone cost less than 200$, including airtime charges. On the other hand, EO had to charge customers the cost of adding a phone to its device.
AT&T could sell only 10,000 pieces. By 1994, the company halted EO’s production.
HP PALMTOP PC LX SERIES
In 1991, HP entered the PDA category with the launch of Ms-Dos-based HP 95 LX Palmtop PC in collaboration with Lotus Development Corporation. The device was more of a mini-computer with a separate physical qwerty keyboard. The company continued to churn out a new line of Palmtop PCs.
HP Palmtop PC 300LX was the first HP device with Windows CE OS.
The company launched HP Palmtop PC 320LX in 1997. The price of an entry-level product was 999$.
The Problems — HP was a mini portable computer competing in a PDA market. The product was fighting against portable laptops and desktop PCs. The smaller screen and the performance levels didn’t meet the PC customer’s needs nor the PDA customer’s needs. People found the interface difficult to use. The bulkiness also kept the PDA customers away from the product.
NOKIA COMMUNICATOR 9000
Nokia also entered the PDA market with the launch of Communicator 9000 — It was more like a handheld PC than PDA and was similar to HP Palmtop PC Series. The product combined a GSM phone with applications like fax, e-mail, short messaging, office applications, and internet access. The phone was big(1.5 inches thick) and heavy (397g). People also saw the entry-level product price of 1000$ as expensive. The Nokia Communicator remained a niche product for the next few years and never reached a critical mass.
Now, let’s move to the Palm Pilot story.
THE PALM PILOT STORY
Before moving ahead, let’s rehash some key terms.
TECHNOLOGY(Disruptive Product) ADOPTION LIFECYCLE
Introducing products with new technology may demand change in consumer behavior(It’s a well-known fact that any change in the status quo would always face resistance). The research shows that a new technology product can penetrate the population by dividing the available market into five customer segments and design the product according to each segment’s needs.
The five customer segments are — Innovators, Early Adopters, Early Majority, Late Majority, and Laggards. The product has to evolve to meet the needs of every target segment as they all differ from each other. In that scenario, the research shows that the product adoption rate will follow a “Bell” distribution curve.
Among the customer segments, the Early Majority is the critical customer base. Late Majority and Laggards follow and copy their behavior. So, if a brand could meet the needs of the Early Majority and convince them to buy the product, then the company had broken through the mainstream market.
In the PDA segment, several brands attracted Innovators and Early Adopters to buy & use the product. But they couldn’t convince the people from the Early Majority to purchase the devices. That was the reason for their failure. Geoffrey Moore says that most technological products fail because they fail to make the transition from an early market dominated by Innovators, Early Adopters to the Early Majority. He says there is a big gap between Early Adopters and the Early Majority in the Technology Adoption Curve. He adds that only when a brand crosses this chasm(gap), they become successful. And, it is not easy to cross that gap.
Newton, HP Palmtop PC, IBM’s Simon, Nokia Communicator, Pocket PC, and other PDA devices could attract Innovators/Early Adopters but failed to reach the mainstream market. They could not cross the chasm between Early Adopters and the Early Majority. Only Palm Pilot could Cross the Chasm.
How to Cross the Chasm?
For crossing the Chasm, Geoffrey Moore says that a brand has to transform from a “Sales-Driven” to a “User-Driven” company. They have to think about everything from a customer’s perspective. For that to happen, the team has to spend time with customers. They have to understand user’s needs, desires, anxieties, and changes in attitudes. The team has to become customers themselves. Based on research, the team has to modify the product to meet the needs/anxieties.
Moore also offers few more suggestions to attract the Early Majority segment of customers —
- Proven Product —The “ Early Majority” customers are risk-averse and will look for a product that works flawlessly. They look for a proven product.
- Value — The Early Majority of customers look for three things in a product — It should save their time(productivity), efforts(both physical and cognitive), and money. They need value innovation at a lower cost.
- Design For Integration —The Early Majority looks for seamless integration of the new product with their existing life/process/routine. They will not buy if everything is afresh in a product and not compatible with their past experiences. The product should have some familiar things.
- Peer Review — The Early Majority customers rely on reviews from people in their segment for buying the product.
- Ease Of Use — It is one of the critical parameters. The product should be easy to use. It should be intuitive. They could use the product without referring to any manuals. There should be no need to remember specific procedures for using the product.
PALM PILOT AND CROSSING THE CHASM
We’ve already seen that for crossing the chasm, the first requirement is to understand the user. After understanding their needs, we need to prioritize them.
A customer may have several requirements. However, a company would fail to build a great product whenever it tries to solve too many problems at once. Moreover, time, resources, and money are all crucial constraints. So, the best way is to identify and focus on a section of critical needs that could offer significant value to a customer. Break the needs, categorize them based on the pain, frequency, number of users who have that, and rank them. Establish priorities.
Palm Pilot’s team also studied their customers. Jeff Hawkins, Palm Pilot’s founder, lived like a customer. He and his team had developed a better understanding of customers’ needs and also prioritized them.
1.0 DESIGN FOR PORTABILITY
In the beginning, PDA’s exclusive target segment was traveling business executives. To attract them, Jeff Hawkins believed that portability is more important than being packed with features. He strongly felt that a PDA needed to be as light as possible so that people would feel comfortable enough to carry around with them everywhere. The research also suggested the same. So, before finalizing the components, technical specifications, Jeff’s team worked on getting the right size and shape for the product.
Steve jobs “I have always found is that you have to start with the customer experience and work backwards to the technology.”
To constantly remind him and his team about the importance of portability, Jeff carried around a block of wood, the size and shape, and weight of the eventual Palm Pilot model.
The first Palm Pilot model size was 4.7 x 3.1 x .7 inches. The weight was around 160gms. Compared to this, Newton IInd generation MessagePad was 7.5*4.7 inches large and 0.8 inches thick. The Apple device weighed around 581gms. IBM’s SIMON was 8.0*2.5 inches large and 1.5 inches thick. It weighed around 510gms. Most of the competitor devices were too large to fit into a pocket and too heavy to carry around.
Below image — Newton model — for size comparison
Apple Newton in Pocket
Below Image — PALM PILOT for size comparison
When every brand was trying to add more features and functionality in their PDA without thinking about the product’s size, Palm Pilot focused on making the sleekest product that could slip in a person’s pocket. It became a vital driver for wide product adoption among mainstream customers.
2.0 DESIGN TO MEET NEEDS THAT OFFER HIGHER IMPACT
Do not promise a better product, but promise a better life. Create a new meaning for user’s life.
We’ve already seen that most of the brands crammed several features in their PDA devices — Address book, notepad, organizer, applications like spreadsheets, word processors, financial management software, clock, calculator, games, and several other applications. At that time, there was no suitable memory or processing power, or battery power to support those applications. Appending more functions increased the bulkiness of the device, complicating the product.
There’s a common myth about new product development — The more features we add, the more customers will like it. However, the research shows that a brand can maximize new product adoption only by minimizing complexity.
Brands like Apple, IBM, HP saw their devices as a miniaturized and cut-down version of computers. They positioned their PDA as an alternative to laptops. Unfortunately, the product’s performance paled in comparison to desktop PCs. Customers didn’t see them as an alternative to desktop computers. Moreover, portable computers were becoming smaller and smaller, rendering handheld PCs irrelevant.
Peter H.Lewis wrote in The Baltimore Post, “When it was first described publicly more than a year ago by Apple’s chairman, John Sculley, the Newton was said to be a combination of pen-based computer, personal organizer, fax and data communicator, and wireless messaging system.”
A product for everybody is a product for nobody.
A few brands positioned their product as a combination of a mobile phone and a computer — again, it confused people. It couldn’t replace a computer or a phone. EO Personal Communicator was a Phablet(Phone + Tablet) fighting in a PDA market.
PALM PILOT & USER NEEDS — On the other hand, Jeff Hawkins believed that to attract mainstream customers, handheld devices did not need more functions — they need fewer. The research showed that people who bought PDAs were already owning PCs. They preferred computers to work on office applications like a spreadsheet, word processor, and financial management software. So, the customers didn’t want a PDA to replace the computer but as an accessory for the PC. They wanted some kind of “mobile connectivity” to their PC when they were away from the office. While on travel, they also used only a few applications.
The research showed that most customers needed only the following four applications — Calendar, list-making, note-taking, and contacts-list. There was no need for spreadsheets or word processors or games or financial software.
Jeff Hawkins saw that focusing on a few uncomplicated applications would bring down the processing power, battery, and memory requirements. It would also result in lowering the cost of the machine. Another benefit — The smaller components would lead to a reduction in the overall size of the machine. It could truly become a pocket-sized device.
When the U.S Robotics launched the first Palm Pilot, it was underpowered compared to the Newton that had come out years before — Yet, it performed better than the latest competitor PDAs. The secret — Focusing only on few basic applications.
We have often heard that the key to creating a great product is not what you put in but what you leave out. The Palm Pilot team knew what to omit. The user research guided them.
Products get closer to perfection when no more features can be eliminated.
POSITIONING — When competitors positioned their devices as an alternative to computers, the Palm Pilot team positioned their PDA as a personal PC companion — It needed a PC to function.
The positioning reflected the need of customers.
Look at Palm Pilot’s advertisements. They promoted only the organizer functions of the PDA. They also projected the device as a PC companion(See the “Part of your PC” in their ads).
PDAs are designed to function primarily as personal organizers and communicators, not tiny computer workstations — Craig Stoltz, Washington Post, 1995.
3.0 DESIGN FOR “EASE OF USE”
The next critical factor that helped Palm’s success was its Ease of Use. I feel that this is the most important factor than anything else.
Promotion — Ease Of Use makes people love the product. They become loyal to the brand and happily share the product’s benefits with their friends and acquaintances. It results in positive word of mouth.
Definiiton — The ISO defines Ease Of Use as — “The extent to which a product can be used by specified users to achieve specified goals with effectiveness, efficiency, and satisfaction in a specified context of use.”
Design Definition — Ease Of Use — On seeing, customers should readily comprehend how to use the product. It should be an intuitive design. There should be no need for manuals/help pages in using the product. The design should have familiar elements — It should simulate real-world processes wherever possible. The product design should work around the user’s existing skills and habits.
The Typical USER PERSONA — When the team was building the first Palm Pilot, Jeff Hawkins told them, “Our competition wasn’t with other PDA devices. It was pen and paper.” That was the needed mindset.
You have to think everything from the perspective of a user who had been using only pen and notebook to make notes and appointments. Imagine that he/she had no experience with using computers —So, the new product design should appeal to him/her.
PALM PILOT & EASE OF USE — One essential rule in design is to reduce the number of taps required to complete a task. Moreover, the frequently used applications should be readily accessible.
We’ve already seen that customers would often use the four applications — Calendar, list-making, note-taking, and contacts-list.
Have a look at the image below — See the four shortcut keys at the bottom — People with no computer experience could instantly access those applications.
Now, have a look at one of Newton’s later generation devices —No Shortcut Keys — Even inside the touchscreen window, only two applications were present.
Ease Of Use and Other PDAs — Regarding other PDAs — Several customers had written that they took one or two days to learn the interface and basic functions. They also added that they struggled for hours to load the contact list and upcoming appointments. There were reports that people made errors even after months of steady use. Sometimes, those errors cost time, money, and reputation. It frustrated the users.
The following paragraph is a user’s account of PDA use(from Washington Post(1995)) —
Keith Jenkins, a frequent traveler, required regular communication with home and office. She bought Newton 120 to meet her needs. Her major requirement was to jot down notes. She reports, “I’m constantly jotting notes.” About PDA usage, she says, “Sometimes the PDA was easily at hand. But the act of opening the carrying case, pulling out the pen,’ turning on the machine, and then paging’ through to the Note section just involved more work than scribbling on paper. And paper always seemed to be around, whether I was at someone else’s office, on the subway, in the grocery store, or somewhere in between.” Worse: inputting lengthy notes is “an exercise in patience and endurance.”
On the other hand, Palm Pilot gave people instant access to notepads, address books, calendars, and to-do lists.
Regarding HP LX Palm Top, Customers wrote — The display strained eyes, the tiny keyboard was tough to use, and lacked tactile feedback. They added that the keyboard was not designed for taking quick and long notes.
People said that Pilot’s software made managing calendars, contacts, to-do lists, and memos easier and quicker than other PDA models that had come before.
DATA INPUT & EASE OF USE — Data Input played a pivotal role in improving the Ease Of Use. Because of their size, entering data into a PDA requires a tiny keyboard or some handwriting recognition system. The pocket-size requirement of the PDA ruled out the possibility of having a physical QWERTY keyboard. So, the only option the brands had was to invest in handwriting recognition software. And that affected the user experience.
Handwriting recognition was the critical reason behind the failure of Newton, EO, Simon, and a few other devices. Users were frustrated while using those products. The software demanded a steep learning curve, complicating the tasks. Even then, it was error-prone.
Below is from the article published by Peter H.Lewis in The Baltimore Post. In that article, Peter shares his experience on using Newton’s Handwriting Recognition Software —
Peter’s try at typing on Newton —
Day One: This is being writings a worth it takes a while before the handed tiny red floor is footprint. Signed, Bite (poof!) Beers (poof!) been (poof!) I sits.
Day Two: This is being written on an Apple newton Message Pad. It talks a while before the handwriting recognition is footprint (poof!) footprint (poof!) foolproof. Signed, Pete.
Day Three: Fare well, Newton. See you in six moths. Panics! (poof!) Thanks!
So many errors!
Peter adds, “The bottom line on the Newton Message Pad is that Apple promised too much and failed to deliver a useful device for everyday executive chores.”
GRAFFITI —Jeff’s team was aware that their product success depended on getting the handwriting recognition right. For over a decade, the team had been working on handwriting recognition software, named PalmPrint, for the GEOS-based Zoomer devices. So, they had more experience than competitor teams.
The Palm team came out with a solution called the Graffiti Handwriting System. It was a printed character recognition system. It used a pre-designed set of glyphs to represent letters, numbers, and symbols. It also had dedicated character-entry areas.
The graffiti system was far more accurate in character recognition than other PDA devices in the market. A user could learn the simplified alphabet in twenty minutes. Palm Pilot also had a qwerty keyboard and could be used with the help of a stylus.
Palm OS was stable and had a simpler GUI. Anybody can pick up the device and quickly navigate through the functions. Later, it is also called the Apple of PDAs for its user-friendly interface.
John Simons wrote in Fortune magazine(2001), “The Palm devices and the minimalist software that powered them represented a new kind of computing built on simplicity, an alternative to the aggravating complexity of Microsoft’s Windows. The Palm approach didn’t concern itself with chip processing speed and hard-drive capacity. No hourglasses while programs loaded. No crashes. The Palm just made life easier.”
The Ease Of Use was one of the reasons behind the popularity of the Palm Pilot device in its early years.
4.0 DESIGN FOR COMPATIBILITY
New product adoption rate increases based on how it fits into a user’s existing systems, habits, experiences, and values. A more compatible product will reduce uncertainty in the minds of customers.
As Palm Pilot promoted the PDA as a PC companion, it had to be compatible with a person’s home/office computers. Compatibility can speed up or retard the rate of adoption. Most of the PDAs had complicated procedures to connect and transfer data to and fro from PC.
Jeff Hawkins was aware of the importance of Palm’s synchronization with PC.
The Palm team introduced one-button synchronization with the help of a docking station. The HotSync software and companion PalmDesktop information manager worked seamlessly to allow information transfer between PC and the device. The Palm Pilot’s limited applications made the job easier. Customers loved it. The Palm Pilot also automatically backed up the data with every sync, minimizing the trauma of losing valuable information/files.
5.0 DESIGN THE PRICING TO HOOK THE CUSTOMERS
We saw that the Palm Pilot’s target customers were paper and pen users and not the tech-savvy ones. Those customers would be comparing the device price with the notepad, pen, calendar, and other physical organizers they had been using. So, the company shouldn’t arrive at a price by comparing it with other PDAs or handheld computers.
For enticing those paper & pen customers, the price should be kept as low as possible. Otherwise, they would ignore the product. The research also showed that a product priced in the range of $200–300 would be an attractive proposition. So, Jeff Hawkins and his team launched the first Palm Pilot at $299. It increased the product’s adoption rate.
Price of Competitor PDAs — Let’s have a look at Newton’s price at that time — A base unit with no communication features had cost $699. A basic, external fax modem had cost another 100$. The support cables and the software to link it to the PC had cost another 149$. With accessories like the battery pack and AC adaptor, the final price was nearly 1500$. The price repelled most of the potential customers. At that time, the average price for most of the PDA devices in the market was around 1000$.
Palm Pilot’s user research helped them to arrive at the right price. And it changed the PDA market itself.
6.0 DESIGN FOR RE-INVENTION
In every market, there would be some percentage of extreme and outlier users. Their requirement might slightly vary from the majority of customers. They might need one or two additional applications. The research shows that the adoption rate increases when a brand allows users to change or modify the product to meet their requirements. Those users would become active promoters of the product. Sometimes, brands don’t allow re-invention as they fear maintaining quality control of their product.
Palm Pilot and Re-invention — Palm made a crucial decision that changed its future and product adoption rate. The company opened up its Pilot OS to third-party developers by releasing its SDK. The company didn’t expect much to happen with that release. However, it led to the launching of stunning applications for Palm Device. Existing users played a pivotal role in developing those apps. It became one of Palm’s competitive advantages over other devices. Other brands failed to publish their SDK, fearing loss of quality control and user experience.
Marek Pawlowski writes, “Back in the late 1990s, Palm OS was the only platform for which developers could create an application which would work across multiple devices, using commonly accepted tools and know there was an effective marketplace to reach consumers — the dominant online store of the time: PalmPilotGear. As a result, consumers flocked to Palm because they knew they were buying so much more than a PDA -they were buying something which could be expanded with games, productivity tools, and pretty much any application they could imagine.”
It took just 18 months for the first Palm Pilot to sell one million units.
Palm Pilot succeeded because they understood the customer’s needs better than any other competitor. Jeff Hawkins and his team lived like users. They focused on user experience than adding several features. They looked at ways to increase a person’s productivity. The result —The Palm Pilot became a pocket-sized device. It had minimal applications, an easy-to-use interface, handwriting recognition software that worked, and seamless one-button synchronization with the PC. And the company could launch the device at an affordable price of 299$.
All the above factors and their interlinking as a chain helped Palm Pilot succeed in the PDA market when other competing brands floundered.
References:: Crossing the Chasm by Geoffrey Moore, Diffusion of Innovations by Everett Rogers, Playing to Win by AG Lafley, The Innovator’s Dilemma by Clayton Christensen, What great brands do by Denise Lee, Positioning by Al Ries and Jack Trout, Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of Blackberry by Jacquie McNish and Sean Silcoff, Microsoft.com/Buxtoncollection, NCBI Article on Personal Digital Assistants by Richard H. Wiggins III, MD, InfoWorld article on 18 April 1994, Blink by Malcolm Gladwell, Creating Breakthrough Products by Jonathan Cagan, Simon article in Business Insider by Steven Tweedie, history-computer.com, hembrow.eu, olcomputers.net/eo-440.html, Artcile by Ernie Smith on Inputmag.com, Palm Pilot Professional — Sync — Youtube — Nostalgic Tech, Retro REVIEW: Palm Pilot Professional PDA Organizer — Youtube, Article in Fast Company by Harry McCracken, Palm Product through the years — CNET, computerhistory.org, Palm: Gone But Not Forgotten by David Mathews on Techspot.com, Palm provides a case study in user experience strategy by Marek Pawlowski — Published in Mobileuserexperience.com, Article on Palm by John Simons Fortune magazine(2001), Article on Newton by Peter H.Lewis in The Baltimore Post.